Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS ORDER CONFIRMATION BILL

BROWNIES TAING PIER ORDER CONFIRMATION BILL

Read the Third time and passed.

Oral Answers to Questions — ENVIRONMENT

House Building

Mr. Skinner: asked the Secretary of State for the Environment what further proposals he has for increasing house building in the public sector.

The Minister for Housing and Construction (Mr. Reginald Freeson): Out measures have produced a major expansion in house building in the public sector. In the first 11 months of 1975, there were 160,000 starts. This is markedly more than for the whole of 1974, and 50 per cent. more than for 1973. New approvals, too, are also increasing. For the first 11 months of 1975, they were 12 per cent. up on the same period of 1974 and 51 per cent. up on 1973. I expect these results to continue.

Mr. Skinner: It reads like an end-of-term report—"Slight reasonable improvement, but Tony needs to do much better." Does my hon. Friend appreciate that one of the factors inhibiting local authorities from being able to build even more houses is a factor that I have mentioned before—namely, the 60-year financing of local authority housing and the urgent need to reduce that span even

if only for 40 years? Moreover, does my hon. Friend appreciate that in order to give an incentive to local authorities to build, at the same time as reducing the span to, say, 40 years, for each additional house built we should write off a house built in, for example, the 1919–20 period? That will provide an added incentive and will not cost a great deal more money.

Mr. Freeson: My own view is that the most important political incentive to get houses built by local authorities with Government backing is the political will, as well as the legislative framework and financial resources with which to do it. That is what will decide at national and local levels whether we continue to expand local authority house building and, indeed, housing association house building, as has been the case for the past two years. Certainly I am prepared to consider the terms of financial local authority house building in the context of the housing finance review. However, although I sympathise with the idea of looking at this aspect afresh, I do not accept that it is a main or significant factor.

Mr. Michael Morris: Far from looking for an expansion in the public sector, is it not about time that the Government considered what is happening in the public sector? Public housing costs are increasing by about 30 per cent. There are now examples of rent levels covering only 12 per cent. of costs and of flats being built at a cost of £73,000.

Mr. Speaker: Order. This is not a debate.

Mr. Morris: Is it not time that there was a review of what exactly is going on in that area?

Mr. Freeson: The hon. Gentleman has not been paying attention. A major and fundamental housing finance review is now being conducted by the Department. That is not a reason—I put it no higher—for advocating a reduction in local authority house building when we need houses for people to live in.

M40 Motorway

Mr. Marten: asked the Secretary of State for the Environment what is now the target date for completion of the M40.

The Under-Secretary of State for the Environment (Mr. Kenneth Marks): Subject to the satisfactory completion of all the statutory procedures and to the availability of funds, we hope that the M40 motorway between Waterstock, Oxfordshire, and Umberslade, Warwickshire, will be completed by the mid-1980s.

Mr. Marten: I take this opportunity to congratulate the Minister on his new appointment and to wish him well in his office.
Does he realise that there are people who are rather worried about some of the statistics? I am a great supporter of the M40 extension, but will the Minister give an assurance to others that during any inquiry that might be held statistics concerning the traffic flow and forecasts could be questioned?

Mr. Marks: I am grateful to the hon. Member for his kind welcome.
A further economic appraisal of the scheme will be made when the final route is decided and the standards to be provided will be subjected to review. On the question of financial estimates, there has been some disagreement expressed by local action groups which, I am sorry to say, have taken building and construction in Western Avenue and Bromsgrove into consideration rather than the actual stretch of motorway to which we were referring.

British Railways

Mr. Ioan Evans: asked the Secretary of State for the Environment what further discussions he has had with the Chairman of British Railways regarding proposed cuts in rail services and if he will make a statement.

Mr. Adley: asked the Secretary of State for the Environment when he expects to make a statement on the railways.

The Secretary of State for the Environment (Mr. Anthony Crosland): I would refer my hon. Friend and the hon. Member to the statement that I made on 16th December 1975 in reply to my hon. Friend the Member for Glasgow, Spring-burn (Mr. Buchanan). I shall make a further statement at the conclusion of the Transport Policy Review.—[Vol. 902 c. 620–1.]

Mr. Evans: I thank my right hon. Friend for that reply. I am aware of his statement. Does he realise that there is a great feeling of anxiety in Wales about the report that a plan is being considered by British Railways to reduce the railway system in Wales to a southern line to Swansea and a northern line to Holyhead as part of the plan which has been considered for a major reduction of the railway system throughout Britain? Does he also realise that there are deep anxieties among the railway unions—the NUR, the TSSA and ASLEF? Should not the Government look back at what the Labour Government did in 1945 with the national transport plan with an integrated road and rail system?

Mr. Crosland: I am aware that there are acute anxieties, which, I regret, have been fanned by extravagant statements bearing no relation of any kind to reality. The anxieties in Wales were further strengthened by the publication of a map showing the situation described by my hon. Friend. That map has no foundation for what is going on in the Department. I can give my hon. Friend that complete assurance.

Mr. Adley: Is there not a danger that the railway system will price itself out of the transport market and become a service for the better off subsidised by taxpayers, including taxpayers who cannot afford to travel by rail? Is the Secretary of State aware that the consumer appears to be the last person whose interests are taken into account not only by the railways but also by other nationalised industries? Will he give an assurance that in some way the consumer will be brought into any discussions on future railway policy?

Mr. Crosland: Many discussions will take place on future railway policy and, indeed, on future transport policy as well, because no systematic Government statement on transport policy has been made since 1968 and it is time that we had one. I shall consider what the hon. Gentleman said about consulting consumer interests. That is an important and legitimate point.

Mr. Bagier: Does my right hon. Friend agree that, even though there may not be plans within his Department for the massive cuts described by the three railway


unions, which he described as "codswallop", it is a fair assumption from the present investment figures allowed to British Rail that the natural follow-on in the absence of a directive from the Government will be either a massive increase in fares or a cutback in the present service? When will the Government put the minds of the public at rest by putting the working of British Railways on a long-term base as a matter of Government policy?

Mr. Crosland: I cannot accept what my hon. Friend said about the relationship between the level of investment and the size of the rail network. On future procedure and setting the minds of the public at rest, I should point out that I now have a mass of papers on transport policy surrounding me. I hope shortly to consult my colleagues about this matter. It is my intention in the next few weeks, after consultation with them, to issue a consultation paper, which will form the basis of consultation with rail management and unions, bus management and unions, and other interests, including local authorities concerned with transport problems.

Mr. Raison: Did the extravagant statements to which the right hon. Gentleman referred include the speech by Sir Richard Marsh last week when he spoke about the size of the basic railway?

Mr. Crosland: No, they did not include that speech. This morning I had time for a quick glance at Sir Richard Marsh's speech and his concept of the basic railway. That concept has influenced both Conservative and Labour Governments. I do not challenge the general manner in which he set forth that concept. The extravagant statements to which I referred before Christmas included the publishing of a map showing the end of all rail services to Grimsby. That certainly would not be acceptable.

Mr. Dalyell: In those extravagant statements there is the suggestion that railway lines north of Edinburgh and Glasgow might be closed. Granted the oil-related needs of the north-east of Scotland, is not that codswallop?

Mr. Crosland: Yes. It is utter codswallop.

Mr. Monro: Is there not grave concern among railwaymen, particularly north of the border, that there will be substantial cuts? I appreciate that the right hon. Gentleman is to make a statement soon, but does he realise that, if possible, it must be made this month to allay those fears?

Mr. Crosland: I want to allay those fears as soon as I possibly can, because they cause anxiety. I hold strong feelings about those who have chosen to conduct a public campaign on the basis of proposals utterly without foundation. I shall seek to make a statement that will allay such fears as soon as I possibly can. I cannot guarantee that it will be by the end of this month, but it will certainly be in the next few weeks.

Local Government Finance

Dr. Edmund Marshall: asked the Secretary of State for the Environment on what date he received the report of the Layfield Committee of Inquiry into Local Government Finance.

Mr. Jessel: asked the Secretary of State for the Environment when he expects to publish the Report of the Layfield Inquiry into Local Government Finance.

Mr. Michael Morris: asked the Secretary of State for the Environment when he expects to publish the report of the Layfield Inquiry into Local Government Finance.

Mr. Crosland: I expect to receive the report in the next few weeks. It will be published as soon as practicable thereafter.

Dr. Marshall: Is there any particular reason why the Layfield Committee was unable to meet its original deadline of reporting before the end of 1975? Will my right hon. Friend give a little more assurance to the House by specifying an exact date on which he expects to receive the report?

Mr. Crosland: I cannot specify an exact date. There is no particular reason for the delay. The general reason is, not surprisingly, that this is an incredibly complex problem. It has not been systematically studied in this way for 50 years.


It is a problem to which there was no consensus solution when the Committee was set up. I was surprised that the Committee was willing to accept the original deadline. This is the hardest working committee of which I have had knowledge in Government, and I do not grudge it a few extra weeks to prepare a thorough report.

Mr. Jessel: As rates are such a heavy burden on householders, will the Government act with reasonable speed on receiving the report to reform the system and replace it by something more equitable? In particular, will they consider taking the cost of education, which is the biggest single item of local authority expenditure, off the rates and putting it on to the Exchequer?

Mr. Crosland: I cannot say with what speed I shall act until I know what the report recommends. The policy of the Opposition, which was stated by the Leader of the Opposition, is to abolish the domestic rating system. Unfortunately, they have utterly neglected to say what area of taxation they would increase to make good the loss of revenue.

Mr. Morris: Is the right hon. Gentleman aware that the majority of ratepayers would prefer the Opposition's policy of abolishing domestic rates? As the right hon. Gentleman has now waited over 18 months for the report, will he be more forthcoming and tell ratepayers in what sort of time span he will react to this report?

Mr. Crosland: I cannot say how I shall react to the report until I know what it proposes. That seems reasonable, elementary common sense. I do not doubt that all domestic ratepayers would welcome the abolition of the domestic rate. The question is whether taxpayers would welcome the increases in tax which they would have to pay to make good the loss on domestic rates.

Mr. Peter Morrison: asked the Secretary of State for the Environment whether he will publish proposals for reorganising the method by which local goverment is financed.

Mr. Crosland: No, Sir. I am awaiting the report of the Layfield Committee on Local Government Finance.

Mr. Morrison: Is the right hon. Gentleman aware that there is increasing bitterness among ratepayers about the method by which local government is financed? Is he further aware that his earlier answer will not give very much hope to domestic ratepayers? Will he assure us that, whatever the Layfield Committee says, the Government will ensure that in future local government is financed on a more equitable basis?

Mr. Crosland: Of course there is dissatisfaction among ratepayers, although there is probably less militancy on the subject now than there was at this time last year. Indeed, there is dissatisfaction with taxation of any kind. I cannot give an assurance about what will come out of the Layfield Inquiry, but if the Layfield Report proposes a system that is clearly more equitable than the present one naturally I shall be extremely sympathetic to it.

Mr. George Cunningham: Is my right hon. Friend aware that inner London authorities are grateful that their rate support grant next year will more nearly reflect their intense needs? Is he aware that there will be great resentment if that advantage is offset by a big increase in the inner London surcharge under the London rate equalisation scheme, a surcharge that operates as a straight subsidy to rates charged in outer London?

Mr. Crosland: I am grateful for what my hon. Friend said at the beginning of his remarks. We have all noted the decision of the GLC as reported in the Press today. As for what the ILEA might or might not do, that is something on which I do not think I should comment.

House Renovation Grants

Mr. Nicholas Winterton: asked the Secretary of State for the Environment how many house renovation grants were authorised for the first 11 months of 1975 compared with the same period in the previous year.

Mr. Freeson: Grants for approximately 119,000 dwellings in England and Wales were approved in the first 11 months of 1975, compared with 224,000 in the same period in 1974.

Mr. Winterton: Is the Minister aware that that is an obviously disappointing


reply? It indicates that the Government do not give sufficient priority to the improvement and renovation of existing homes. Does he agree that the improvement and renovation of existing homes, particularly cottage properties, in many towns is more satisfactory and cheaper than demolishing dwellings and building new homes? Does he further agree that the improvement and renovation of existing homes keeps communities together, which in turn prevents a lot of vandalism and other crimes which have recently increased?

Mr. Freeson: I am not sure about the last point. It would be wrong to oversimplify the causes of vandalism and social violence.
On the first part of the hon. Gentleman's question, I accept broadly what he said, which virtually paraphrased what we are saying in our policy circulars to local authorities. The figures are disappointing, even if we allow for an expected reduction following the ending of the 1971 temporary Act, which increased grants and the imposition of conditions on the issuing of grants—which are common ground between both sides of the House—to stop abuses. We are concerned to see greater publicity and efforts by local authorities to speed up the process. We must also take account of a period in which the housing market slowed down because a great deal of the improvements in the past in the private sector took place when old properties changed hands. A number of factors led to the slowdown. It is far too great a slowdown from our point of view and we shall do our best to increase the take-up.

Mr. Rose: I welcome the change in emphasis in my hon. Friend's policy. Is he aware that the amount of money at present being spent on improvements is becoming increasingly prohibitive for ordinary house owners? Will he encourage a further increase back to 75 per cent. for large-scale compulsory purchase and development areas in the cities, because in the short term as well as in the long term that may lead to a reduction rather than an increase in local authority expenditure?

Mr. Freeson: My hon. Friend has indirectly pinpointed an aspect of the policy to which I did not refer earlier, and that is that in so far as one seeks to

get an improvement in activity here, particularly bearing in mind the financial situation in which we find ourselves, the priorities must go to the stress areas. Although perhaps not in precisely the terms that my hon. Friend has put to me, the fact is that we have acted along those lines, in that 75 per cent. grants are available on properties in designated housing action areas, and 60 per cent. grants are available in designated general improvement areas, compared with the normal 50 per cent. generally throughout the country.

Mr. Stephen Ross: Has the hon. Gentleman reached a conclusion about raising the lower limit of rateable value, which is £175 in rural areas? He has been considering this, and it would help if this decision could be made and the lower limit raised.

Mr. Freeson: We have made it clear, and my right hon. Friend the Secretary of State reinforced this in a recent speech, that we are examining this matter. We are still collating information about how rateable value levels are affecting take-up. Although we have not yet come to a conclusion, because of the way things are we are likely to give sympathetic consideration to conversions for owner-occupied properties, which would ease the situation in those areas from which we have received information that there is some inhibition in carrying out this work.

Mrs. Millie Miller: In view of the vast number of empty properties in the centre of London, which is a stress area to end all stress areas, is it not time that my hon. Friend considered having a formula for using these properties and thereby using some of the grants that are available for conversion? There are enough properties in the centre of London to satisfy the housing needs of central London dwellers if these houses can be brought into use. I strongly recommend my hon. Friend to start work on a system of ensuring that these houses are used for people to live in rather than that these properties should remain empty.

Mr. Freeson: I accept the seriousness of the point that is being put to me, although it goes wide of the specific subject covered by the Question. The position is that local authorities have a general consent to negotiate purchase.


Additional compulsory purchase powers were granted to them under the 1974 Housing Act. They were given powers by the Government to purchase properties which had been standing empty for more than six months. Beyond that, I have said clearly to representatives of the local authority associations that we shall give sympathetic consideration to the purchase of empty properties within that six-month period if the authorities concerned give us the stress reasons in the areas concerned which have led them to make such applications, and I hope that they will take up that offer.

Mr. Rossi: The hon. Gentleman has given a number of reasons for the lamentable fall in the number of properties being improved by means of grants, which at the time of the Conservative Administration was about 400,000 new houses and homes a year. Is not the truth of the matter that the Government, by their savage cuts in housing subsidies, have always made the heaviest cuts fall upon improvement grants because they insist upon making resources available for irrelevancies, such as municipalisation, which do not improve or provide homes for people?

Mr. Freeson: That is a canard that is frequently trotted out when questions on this subject are asked. It is about time that the hon. Gentleman stopped trotting it out, because it does not relate to the facts. Municipalisation policy carried out by local authorities, or social ownership through housing associations, is directed primarily to properties that are sub-standard and in need of improvement and conversion. This is the policy that we are pursuing.
With regard to expenditure on improvement grants in the private sector, I must tell the hon. Gentleman that the figure quoted by him is an exaggeration, although the figures were higher two or three years ago than they are now. That was largely as a result of the 1971 Act, and also because of certain abuses, or flexibilities, to which the Conservative Party decided to put a stop—a policy that we pursued when we came to office.
In addition, as I explained earlier, there have been other reasons for the present situation. We are concerned about what is happening, but it is incorrect and deliberately misleading to

suggest that we have undertaken a major cut compared with the Conservative Party's policy for improvement expenditure. The figure which the Conservative Government left us was £169 million a year. We have increased that to more than £250 million.

Mr. Peter Bottomley: asked the Secretary of State for the Environment when he plans to introduce higher rateable value limits for renovation grants for house conversions.

Mr. Freeson: I am considering this matter.

Mr. Bottomley: While not thanking the Minister for a very helpful reply, may I seek his assurance that it makes economic sense for individuals to spend their money on housing? While doctrinaire controls forbidding the sale of council houses are unrealistic, like limits to the range of improvement grants, will he take steps to improve the housing situation in the way that all families seek?

Mr. Freeson: I dealt with this subject in the context of some supplementary questions earlier. Both sides of the House have common ground in the type of conditions introduced in the Housing Act 1974 to stop some of the abuses and free-ranging expenditure in relation to improvement grants. But I have said—and I meant it—that we are looking at the way in which the rateable values that have been fixed are having an effect in some parts of the country and at ways in which they might be changed, and I indicated how I was thinking about the matter.

Mr. Conlan: Will my hon. Friend recognise that the limit of £175 in the provinces is ridiculously small, especially bearing in mind that, as rateable values have increased over the years, it is a very modest house that carries a rateable value of £175? Working-class people who occupy houses with a rateable value a little higher than £175 are unable to improve their properties because of this stupidly low figure.

Mr. Freeson: First, and without going into a great deal of detail on the matter—although I should be happy to write to my hon. Friend in greater detail—it would be wrong to accept the kind of generalised statement that my hon. Friend has made about the rateable


value limits, whether those in London or elsewhere. The system does not operate in as blanket a fashion as he suggested. There is certainly no evidence that it is generally inhibiting improvement grant take-up.
However, there are areas where problems have been put to me, and I am examining them. I hope that we shall come to some satisfactory conclusions on the matter shortly. If there are local problems, I should be glad to hear from my hon. Friend or his local authority.

Housing Finance

Mr. Gould: asked the Secretary of State for the Environment when he expects the review of housing finance to be completed.

Mr. Crosland: In the spring or early summer of this year.

Mr. Gould: Will my right hon. Friend accept that one consequence of the virtual monopoly that building societies have in financing house purchase is that many people have no possibility of buying their own homes? Should we not get away from the social divisiveness of the present policy and follow the example of Norway and New Zealand where almost everybody can buy a home by means of a low-interest loan from the State bank? Is not the reduction in the amount of money to be made available for local authority mortgages a retrograde step?

Mr. Crosland: There are later Question on specific aspects of this matter. On the more general point, the housing finance review to which my hon. Friend referred will contain a strong and long section on the whole subject of the supply of mortgages and whether our present arrangements, institutional and financial, are adequate to the tasks that we face.

Mr. Tebbit: Will the right hon. Gentleman consider persuading the Prime Minister to put the Government Chief Whip in charge of this review, as his ideas on housing policy seem to be so refreshingly different from those of his colleagues? He still wants to turn the policy upside down and, as he said—

Mr. Speaker: Order. The hon. Member is making a statement.

Mr. Tebbit: Did the Secretary of State hear the broadcast by the Government

Chief Whip in which he advocated selling council houses? If so, may we please have some finance for that?

Mr. Crosland: I listen to the statements of my colleagues on the radio with as much attention as I can, devoting as much time as I can to them. I regret that I did not hear that speech, but I cannot accept the implication of the hon. Gentleman's question—that all members of this Government do not speak in utter harmony and unison on all occasions.

Mortgages

Mr. Frank Allaun: asked the Secretary of State for the Environment what further plans he has to help provide mortgages to those would-be house buyers who cannot normally obtain them from the building societies either because they are on low incomes or cannot find the deposit or because the houses involved are old ones.

Mr. Sainsbury: asked the Secretary of State for the Environment whether he is satisfied with the success of the transfer of local authority mortgage applicants to building societies.

Mr. McCrindle: asked the Secretary of State for the Environment if he is satisfied with the level of building society lending on pre-1918 properties and with the advances made to those of below average earnings.

Mr. Freeson: Building societies already lend on older property and to people with below average earnings. Although the special £100 million exercise was slow to start, the number of mortgages offered in recent weeks has increased substantially. The Building Societies Association has invited the local authority associations to discuss further ways they might help. I welcome this and will keep in close touch with these consultations.
Further, I am considering problems relating to mortgage funds and those at the margin of owner-occupation as part of our housing finance review.

Mr. Allaun: Is the Minister aware of the widespread dissatisfaction with the present building societies' scheme, which provides for the less well-off only £100 million a year, compared with their £5 billion a year total advances? Will he therefore seriously consider requiring the building societies to lend local authorities


10 per cent. of their annual advances, so that the local authorities can themselves provide mortgages to those desperately needing them? Finally, are not the societies morally bound to make this effort? They are bursting with funds. Did they not recently receive from the Government £500 million to help them to keep interest rates down?

Mr. Freeson: A number of questions are covered by that supplementary question. The £500 million loan has long since been repaid. The 10 per cent. of building society funds which my hon. Friend suggests should be made available to local authorities so that they can provide mortgages for older properties to people on lower incomes is about 50 per cent. of what building societies already lend on old properties to those on incomes below the average industrial wage. About 20 per cent. of what they lend out of their £5,500 million already goes in this way.
The principle of lending from building societies to local authorities is a very attractive proposition that would receive sympathy in certain quarters in the building society movement. The difficulty is that it would add to public sector borrowing, which at this stage of financial management is just not on. I accept that the £100 million exercise has been slow to start—it did not start effectively until about October or November on the ground—but I think that it will work out now.

Mr. Sainsbury: Is the Minister aware of the particular difficulties created in areas where there is not only a large amount of older property but much of it has been converted into flats on which the building societies find it difficult to lend? Will he consider ensuring that those local authorities are more generously treated in their allowance for local authority mortgages and whether there are other ways in which he could aid those areas, where, I am glad to say, there is generally not a massive programme of municipalisation?

Mr. Freeson: The last point does not need to be taken, because the scale of both sides of local authority building is not such as to cause a conflict between them, not on the ground anyway. As for problems in particular localities and the building societies' lending policy, I should

welcome direct approaches between the local authorities and the building societies allocated to their areas. If the matter is still not resolved by such individual negotiations, I hope that the local authority associations will feel able to raise this sort of matter in the discussions to which I referred.

Mr. Ernest G. Perry: Is the Minister aware that one of the reasons for the enormous numbers of empty properties in inner London is that many local authorities cannot find the funds to purchase them or even lend money on them to would-be buyers and that the building societies in inner London refuse to advance more than 50 per cent. on the price of any house built before 1900? What is he prepared to do about that?

Mr. Freeson: There may be individual cases of this kind, but I must repeat that it is not true as a general proposition that only 50 per cent. loans are available on such properties. Obviously, there can be instances, just as there can be instances of local authorities lending on post-1919 properties, of which there are many in London and around the country. However, if there are problems of this kind in the operation of the scheme, at this stage it is a matter for the discussions, which I have already welcomed, that are to take place between the BSA and the local authority associations.
I take my hon. Friend's point about municipalisation and improvements, but no doubt he will recognise that there has been a holding back of local authority home loans in order that more resources may be available for modernisation, improvements and the purchase of old properties standing empty, to which he and other hon. Members have referred.

Mr. Rossi: Is there any truth in the suggestion that some of the principal beneficiaries of the £100 million scheme are council employees and not the public at large? Will the Minister make inquiries, because if that is true it should be remedied?

Mr. Freeson: I am not aware of any such general situation, although it has been the case in the past that local authority home loan schemes have at times been directed to assisting the housing of key workers. For example, in London until recently teachers were


experiencing difficulty because their pay scales gave rise to housing problems. If local authorities have been referring such cases to building societies, I should not find that exceptional or wrong. I have no evidence that special provision has been made in this connection and I do not believe that it has. If the hon. Gentleman would give me case material, I should be glad to examine it.

Transport Policy

Mr. Cryer: asked the Secretary of State for the Environment if he will state what policies he is pursuing to encourage the transfer of traffic from road to rail.

Mr. Marks: The 1974 Railways Act introduced grants for private rail sidings and related facilities and a new system of financial support which means that freight operations now bear a smaller proportion of the costs they share with passenger services.

Mr. Cryer: But would not my hon. Friend agree that the prospects for transferring freight from road to rail are gloomy for 1976, since 51 private sidings closed in 1975 and under the 1974 Act only three sidings are being considered for grant? Is it not time that the Government urgently considered the integration of National Carriers Ltd. and Freightliners Ltd. with the railways as the first step towards an integrated transport system and getting rid of some of the absurd competition between the same sectors of the publicly-owned industry, as a presage of getting rid of some of the juggernauts that are causing such concern in our road system?

Mr. Marks: The policy on sidings is an attempt to increase the number of sidings. It is inevitable that overall there will be a reduction, because many existing sidings were in old works, some of which are themselves being demolished. Three grants have already been approved and 11 other firms are now in the later stages of submitting applications. The building of a siding to a particular works has a considerable effect on the transfer of road traffic to rail.

Mr. Fry: Would the Minister make it clear that there are limits to what can be achieved in this direction and to what British Rail itself can handle? It is important that the public should be dis-

abused of the idea that an enormous amount of traffic can be moved from road to rail. Has he any evidence on the findings of Professor Hall, who suggested that the economy might be better served by turning our rail track into express highways?

Mr. Marks: We shall certainly look in our transport review at all suggestions. There are considerable problems in converting railways to bus routes, particularly where railways run on embankments, as they frequently do. It is true that there is a limit to the transfer which can be made from road to rail. We shall do all in our power, where it is economically sound and efficient, to see that as much as possible is done.

Mr. Bradley: Why will not my hon. Friend implement the quantity licensing provisions of the 1968 Transport Act?

Mr. Marks: At my present stage in this office I should like some notice of a question like that.

Mr. Burden: Is the Minister aware, when talking about transferring transport to railways, that on 2nd January British Rail completely lost a passenger train with all its passengers for 11 hours? This is not a great incentive to put freight on the railways.

Mr. Marks: I am tempted to say that such matters are the responsibility of the British Railways Board, but we are investigating this matter as a result of letters from hon. Members on both sides of the House.

Mr. Walter Johnson: Is my hon. Friend aware that the Government's financial policies are forcing up fares and freight charges on British Rail to such a degree that there is now customer resistance? Surely that is in contradiction to the policy on which this Government fought the last two General Elections.

Mr. Marks: What the Government must face is that there is a big demand for reductions in public expenditure. We are maintaining high rates of investment in the railways. This year's was the highest for some time and it is likely to continue in real terms. Fares are a matter for the Railways Board; it must judge how best to adjust fares to the traffic that it hopes to engender.

Local Authority Staffing

Mr. Durant: asked the Secretary of State for the Environment what plans he has to establish watchdog committees to scrutinise local authority staffing.

Mr. Jasper More: asked the Secretary of State for the Environment if he will meet local authority leaders to discuss the Prime Minister's recent proposal that watchdog committees should be established to scrutinise local authority staffing.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes): It is for each council to decide for itself what committees to appoint, but I have no doubt that local authorities will consider the suggestions contained in the speech given by my right hon. Friend the Prime Minister to the local government conference at Eastbourne.

Mr. Durant: Is the Minister aware that NALGO is anxious about the rumours of cuts and that there will be a need to give some reassurance quickly? Will he remind his right hon. Friend the Prime Minister that his remarks at Eastbourne have not helped the situation in local government, which is at present struggling? To talks of Chiefs and Indians is not helpful to local authorities, which are doing their best to meet the Government's requirements.

Mr. Oakes: My right hon. Friend threw out a number of suggestions to the conference at Eastbourne. I remind the hon. Gentleman that local government manpower over the past 15 years has increased by over 1 million, much of which was due to measures introduced by previous Conservative Governments. Nevertheless, I take the point about representations by NALGO. It is hoped that any reductions in staff that may result will be dealt with by natural wastage.

Dr. Edmund Marshall: Whatever action the Government may take, will they ensure that nothing is done that will undermine the position of democratically elected councillors as the only legitimate representatives of ratepayers in local government?

Mr. Oakes: I am certain that that is so. I assure the House that when my

right hon. Friend the Prime Minister spoke at Eastbourne, among a number of suggestions he threw out the idea of greater participation in local government, which I am sure all hon. Members would want.

Mr. Skinner: Does my hon. Friend appreciate that the Prime Minister was really saying that it would be a good idea to set up watchdog committees in local authorities not from elected members but from others who are non-elected? The Minister should be courageous enough to say from that Box today that we are not in business to set up second chambers all over the country. We have had enough embarrassment with the one we have here.

Mr. Oakes: My right hon. Friend the Prime Minister was not suggesting second chambers. He was suggesting, among other things, greater participation by local authorities, not merely by those wanting to restrict expenditure but by those wanting to extend expenditure and to have greater participation by the public.

Mr. Newton: Will the Minister set up his own watchdog committee to examine the possible effects of increasing local authority staffing and the various proposals for a massive expansion in local authority trading and direct labour organisations?

Mr. Oakes: I am aware of a Private Bill emanating from the West Midlands. We shall examine that Bill. I assure the hon. Gentleman that the resulting staff contents of all legislative proposals put before the House, especially by either the Government or Private Members, are examined.

Housing Policy

Mr. Radice: asked the Secretary of State for the Environment whether he is satisfied with the progess of the Government's housing policy.

Mr. Crosland: No, Sir. Substantial progress has been made in the last two years; public and private house building are both significantly higher; mortgage lending has been stabilised; urban renewal in the worst stress areas has been given fresh impetus; new forms of tenure, such as housing co-operatives and shared


equity, have been sponsored; and initiatives have been taken to improve housing management. But I am still not satisfied, and I intend to see that further progress is made during 1976.

Mr. Radice: I congratulate the Government on the progress that has been made, particularly as to housing figures. Can the Minister say whether he expects the trend to continue? Will he agree that with a considerable housing problem particularly in the older industrial areas, and with a construction industry operating at only about 70 per cent. capacity, it is essential to continue the housing programme?

Mr. Crosland: It is absolutely essential to continue the housing programme, as regards both new building and the renovation of existing stock. I am determined that the programme should continue during 1976. I look forward to a further marked improvement in house building this year as compared with last year.

Mr. Raison: Does the Secretary of State mean that the support for council building will be up next year as compared with the current year? What steps will he take to implement his rather quaint remarks about easing the passing of the private sector? Will he speed up his review of the Rent Acts?

Mr. Crosland: From the figures of approvals that we already have it looks as though the figures for council house building will be higher in 1976 than in 1975. As far as possible I shall certainly speed up that review.

Mr. Watkinson: Does my right hon. Friend recall that it is the Government's intention to introduce security of tenure for council house tenants? Can he say when the Government propose to introduce this legislation?

Mr. Crosland: No, Sir. This matter is under study. I am familiar with the point to which my hon. Friend referred, but I cannot give a date for the legislation—which will be of a fairly limited character—required to carry out the reform.

Mr. Stephen Ross: I give credit to the Secretary of State for an improvement in the housing situation, if only slight. I put one problem to him, that of bridging loans. Will he have conversations with

the clearing banks to ensure that people who move from one job to another can be assisted with their housing problems and obtain bridging loans at reasonable rates of interest?

Mr. Crosland: The whole subject of finance for house purchase, not merely long-term mortgages but short-term bridging loans, is under the most active study as part of the housing finance review. The question goes wider—into whether institutional funds from other sources beyond building societies might not be channelled into the house-building programme. Until the housing finance review is completed, I prefer not to make any particular or partial statement.

Cash Limits (Local Authorities)

Mr. MacGregor: asked the Secretary of State for the Environment when he next expects to discuss cash limits with the local authority associations.

Mr. Lawson: asked the Secretary of State for the Environment when he expects to discuss cash limits with the local authority associations.

Mr. Budgen: asked the Secretary of State for the Environment when he expects next to discuss cash limits with the local authority associations.

Mr. Oakes: My right hon. Friend announced the cash limit in the debate on 15th December on the Rate Support Grant Order 1975. Local authorities have received information about its calculation in Circular 129/75, but I am always ready to discuss it further with them if they wish.

Mr. MacGregor: Is the Minister aware that although these steps towards cash limits are welcome, many people regard them as only the first stage? Will he not agree that cash limits over the totality of local government expenditure, coupled with local independence within these cash limits, are likely to be a more effective way of ensuring that the whole expenditure of local government is more coordinated with capacity to pay and with national economic needs than any reform of local government revenue, however much the latter is to be welcomed? Will he take steps to discuss with the local authority associations ways of bringing


the totality of expenditure within this system?

Mr. Oakes: No, Sir, the limit is on grant and not on expenditure. Indeed, it would require legislation to put it on expenditure, even if the Government so wished, which they do not. We rely upon local authorities. My right hon. Friends and I have constantly urged local authorities to keep the closest possible watch on expenditure. I think that most local authorities are well aware of this.

Mr. Lawson: Is not the Minister aware, however, that the Chancellor of the Exchequer, in his letter to the International Monetary Fund, said that cash limits would be introduced for three-quarters of Government spending? Why is it to be a lesser proportion of local government spending? Does not the Minister agree that in the circumstances it is necessary to support cash limits by manpower limits in the local authority sector?

Mr. Oakes: It is not a lesser proportion. The cash limit for local government will be £480 million in the next year. We have the manpower staff watch and we have constantly urged local authorities to look to manpower, which is one of the greatest sources of expenditure.

Mr. Frank Allaun: Meanwhile, does not last week's cut of 7 per cent. in local authority housing expenditure, other than that on new building, exclude the effect of inflation, which means a cut in real terms of 33 per cent. in mortgages, in municipalisation and in renovation of council properties?

Mr. Oakes: No. I am not responsible for housing, but, as far as I am aware, this is not a cut but a restatement of what the Chancellor said originally.

Mr. Speed: Is not the Minister aware, however, that these cash limits in the rate support grant are not really cash limits and that a coach and horses could be driven through them? Referring to what was said by my hon. Friend the Member for Norfolk, South (Mr. MacGregor), as local government expenditure is one-third of all public expenditure, should we not be looking at real cash limits on the whole total and much greater freedom within that for individual local authorities?

Mr. Oakes: I do not know what the hon. Gentleman means by "real cash limits". If by that he means that this House and my Department should control in detail the expenditure of each local authority, I must tell him that the bureaucratic costs that would arise from trying to do that would probably be far greater than any achievement that might result.

Home Ownership Schemes

Mr. Stanley: asked the Secretary of State for the Environment which local authorities have introduced or are in the process of introducing half-and-half home ownership schemes.

Mr. Freeson: A number of authorities are showing interest in this kind of arrangement, and Birmingham City and Greater London Councils have introduced schemes.

Mr. Stanley: In view of the evidence of the demand for this form of home ownership among those who are council tenants and those on the waiting lists, does not the Minister agree that it would be a desirable and logical extension of "half-and-half" to extend it to sales of council houses to sitting tenants?

Mr. Freeson: The one has nothing to do with the other. It is a very different kind of procedure that Birmingham Corporation and the Greater London Council—and, indeed, others if they take up the idea—adopt. It is not the sale of properties. It is the giving of a financial stake in part ownership by a local authority. This could arise for housing associations as well if they use the system. This is the kind of approach in housing ownership or participation at the margin that I wish to encourage and for which the present Government specifically legislated in the Housing Rents and Subsidies Act in February last year.

Passenger Transport Authorities

Mr. Fry: asked the Secretary of State for the Environment which passenger transport authorities are at present running their services at a break-even point; and which passenger transport authorities are in a financial deficit.

Mr. Marks: None of the passenger transport executives is breaking even. All receive grant from their passenger transport authorities—in England, the metropolitan county councils.

Mr. Fry: With the present set-up, does not the Minister agree that the future is very bleak indeed? There will be either much higher fares, and therefore probably fewer passengers, or a much higher demand for subsidies. Does not this situation clearly indicate the need for an urgent statement of Government policy on the future of urban transportation?

Mr. Marks: I accept the need for an early statement, but one which should be comprehensive. I take note of the great difficulties of metropolitan counties and their PTAs. The grant for bus revenue support expenditure next year will be £20 million, as compared with £36 million for the current year, whereas grants to the non-metropolitan counties are showing an increase.

Mr. Bowden: Will the Minister accept that, although road transport passengers are facing problems, rail commuters are near breaking point? Will he accept that some in my constituency have to pay between £8 and £10 a week to get to work? For how long can they go on facing this sort of burden? What will he do to see that it does not increase?

Mr. Marks: We face demands from the Opposition side of the House for considerable cuts in public expenditure. Whether the hon. Gentleman would include subsidies to commuters is perhaps a different matter. In the transport review we shall have to consider the whole of passenger transport, including the commuters in the South-East, and we shall have to ask ourselves whether taxpayers as a whole should subsidise people who travel considerable distances to work.

Mr. Leadbitter: I think that the Minister will agree that the Chairman of British Rail has recently made some serious public statements about the condition of British Rail and his concern about the lack of policy. It is certainly a negative attitude by the chairman that he wants the general public to decide policy. Having accepted that there is a need for a comprehensive policy statement, will the Minister take note that the House and the country, and certainly the Chairman of British Rail, are anxious to have an early statement in the House, and will he indicate when that statement is likely to be made?

Mr. Marks: I think that my right hon. Friend has already said that he expects consultations and a statement within two months or so. I am sure that we can appreciate the difficulties of the Chairman of British Rail. There has been no major review of transport—and that includes road and rail—for the past seven years. An early statement is desirable, but it is essential that we get it right and consult all interests, including the trade unions, before we make it.

Sewerage Charges

Mr. Hurd: asked the Secretary of State for the Environment whether he will make a further statement of Government policy on the collection of sewerage charges, following the recent decision by the House of Lords in the case of the South West Water Authority versus Daymond.

Mr. Oakes: I have nothing to add to the reply my right hon. Friend the Minister for Planning and Local Government gave to the hon. Member for the Isle of Ely (Mr. Freud) on Thursday 18th December 1975.—[Vol. 902, c. 740–1.]

Mr. Hurd: Will the Minister give some indication of the line to be taken in, Government proposals? Will the view be that people who live in property unconnected to main drainage are to be relieved of any future obligation to pay for main drainage services, or will everybody be treated under the same umbrella and all those who live in properties unconnected to main drainage be told that they should pay but will then have their cesspits and septic tanks cleared without further charge?

Mr. Oakes: Legislation is shortly to be introduced as a result of the High Court case. It is intended that people shall obtain refunds by way of deductions from the 1976–77 general rate demand. A considerable amount of administrative work is involved, but this is the cheapest method of undertaking the operation. I would point out that the present difficulty arises as a result of legislation introduced by the Conservative Government which created considerable difficulty for the nation as a whole.

QUESTIONS TO MINISTERS

Mr. Adley: On a point of Order, Mr. Speaker. I wish to raise the subject of notice given to hon. Members when Questions are intended to be linked. At 2.28 this afternoon I was handed a notice by the Parliamentary Private Secretary to the Secretary of State for the Environment informing me that Question No. 10 was to be linked with Question No. 3. There may be exceptional circumstances operating today, but may I ask that as far as possible Departments should give 24 hours' notice to hon. Members when later Questions on the Order Paper are to be linked with earlier Questions?

Mr. Speaker: No doubt the hon. Gentleman's comment will be noted.

Mr. Gow: On a point of order, Mr. Speaker. On 18th December, in reply to a question raised by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), the Chancellor of the Exchequer said—

Mr. Speaker: Order. I know the point to which the hon. Gentleman refers. It is not a point of order for me.

HER MAJESTY'S GOVERNMENT (OVERSEAS REPRESENTATION)

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): With your permission, Mr. Speaker, and that of the House, I wish to make a statement about overseas representation—indeed, I have two statements to make to the House, for which I apologise. I can only pray in aid the fact that I do not often do so.
I have decided that there should be a major review of the priorities and requirements for our overseas representation. With the agreement of the Prime Minister and of those of my other colleagues concerned, I have asked Sir Kenneth Berrill, Head of the Central Policy Review Staff, to review the entire range of our foreign policy requirements, both at home and overseas, and to consider what the future pattern of our overseas representation should be.
This is an appropriate time for a review as several years have passed since

the Duncan Committee reported, and the issue of British membership of the European Community has now been resolved.
The Foreign and Commonwealth Office has its own Inspectorate which keeps operations and staffing at home and abroad under rigorous review. These regular inspections have helped to achieve the continual redeployment which is necessary to match changes in the workload from place to place and from time to time. They have also contributed to a steady reduction in the size of the Diplomatic Service—that must be unique!—which now employs 12 per cent. fewer staff than in 1965. We must recognise, however, that since the Duncan Report—and I should like to pay a tribute to the late Sir Val Duncan, whose contribution in this field, as in so many others, has been outstanding—there have been great changes both in the international scene and in our own situation.
The review will have the following terms of reference:
To review the nature and extent of our overseas interests and requirements and in the light of, that review to make recommendations on the most suitable, effective and economic means of representing and promoting those interests both at home and overseas. The review will embrace all aspects of the work of overseas representation, including political, economic, commercial, consular and immigration work, defence matters, overseas aid and cultural and information activities, whether these tasks are performed by members of the Diplomatic Service, by members of the Home Civil Service, by members of the Armed Forces or by other agencies financially supported by the Government.
I have asked Sir Kenneth Berrill that the CPRS should complete the review as quickly as possible, and he will be given all the help and information that he requires. I am sure that ready assistance will also be forthcoming from other quarters, both inside and outside the Government.
I wish to make it clear that the decision to hold this review does not reflect in any adverse way on the dedication or the competence of the members of the Diplomatic Service or our other representatives overseas, which has impressed me and, I believe, my predecessors from both sides of the House. Indeed I pay tribute to a Service whose members, with their wives and families, serve the nation well in circumstances and surroundings that are sometimes unpleasant and occasionally


highly dangerous. The work they do has been done well, and often outstandingly well, but the purpose of this review is to examine whether the tasks themselves may require to be changed.
I shall, of course, inform the House of the conclusions of the review.

Mr. Maudling: We welcome the review and the wide terms of reference which I understand do not exclude the Foreign Office from the general review of Government expenditure that is now taking place. We accept that this is no reflection on the Diplomatic Service, which is one of the finest in the world and of which we can be proud. I wish to associate the Official Opposition with the tribute paid by the right hon. Gentleman to Sir Val Duncan, which is very well deserved. I hope that the review will be conducted as quickly as possible. In the meantime, for the avoidance of doubt, will the right hon. Gentleman confirm reports that the CPRS has already made investigations and reported?

Mr. Callaghan: The CPRS started to make inquiries on its own initiative. It has made no report. A certain amount of gossip resulted and was leaked to the newspapers. If there is to be complete co-operation on this matter, I have asked Sir Kenneth Berrill that all concerned with the review at any time should maintain the normal requirements expected when they undertake these jobs.

Mr. Wrigglesworth: Is my right hon. Friend aware of the commitment in Labour's programme to widen the background of recruits to the Foreign Service? Will be give an undertaking that the review will cover this aspect?

Mr. Callaghan: Yes, Sir. I remember what was said and indeed I had some part in it. The purpose of the review is to make recommendations on the most suitable and effective means of representing and promoting those interests. I have intimated to Sir Kenneth that I shall regard it as part of his responsibilities to examine recruitment and staffing. I entered the caveat that the staff side will need to be carefully consulted and must have the fullest opportunity to make their own recommendations.

Mr. David Steel: I recognise that we have a highly skilled Diplomatic Service,

but will the right hon. Gentleman confirm that what is involved is to attune the functions of our Foreign Service to the needs of a middle-ranking Power in the late 1970s and early 1980s? Will the review place proper stress on the commercial function of our overseas representation? Further will the review include in its terms of reference the question whether some consulates might conduct operations jointly on the basis of several EEC countries being represented together in other continents, even if this will involve some change of attitude on the right hon. Gentleman's part?

Mr. Callaghan: On the question of the needs of a middle-ranking Power, I wish to remind the hon. Gentleman of the last part of my statement—namely, that the purpose of the review is to examine whether the tasks themselves require to be changed. I do not wish to anticipate the results of the review. When it is complete, I shall give my own views on the proper rôle of the Diplomatic Service in a country with the history, experience and talent Britain possesses. I shall wait to see what Sir Kenneth Berrill and his associates have to say about the situation.
As for the question of commercial functions, if we take the Middle East as an example, our embassies in the Middle East, except one for particular reason, have been strengthened in the past year. I regard this as being an essential part of the work of the Foreign and Commonwealth Office.
As regards joint representation of EEC countries, I am not sure what the hon. Gentleman means when he mentions a change of attitude on my part. I raised this matter with some of my colleagues, but I discovered that in one area an ambassador could not be found to fill the post. We had an ambassador who could have undertaken the task, but it came to nothing.

Mr. Luard: Will my right hon. Friend say whether the terms of reference of the inquiry will cover not merely the question of representation in the broadest sense but also the relative level of representation in different posts, since some of us believe that there are some posts abroad that are over-staffed, particularly in the number of attachés, who are not,


strictly speaking, members of the Diplomatic Service, whereas other posts are at present too small? Will the review examine the relative scale of different embassies as well as the general problem of representation?

Mr. Callaghan: I do not wish to prejudge the situation, but the aspect mentioned by my hon. Friend is of concern. That is why I am grateful that my right hon. Friend the Secretary of State for Defence has enabled me to include in the terms of reference that Sir Kenneth Berrill should be able to examine the work done by attachés and others and by members of the Armed Forces and other agencies. The appropriate level now required in our embassies is one of the important issues. I want to see an efficient and effective Diplomatic Service. I have no axe to grind. We want the best service we can get in the most efficient and economic way.

Mr. Heath: Is the right hon. Gentleman aware that I agree that, following our entry into Europe, this is a timely matter and that I do not think that the Foreign Service will take exception to a review of this kind? After all, it was necessary before the Eden reforms in the early 1940s, the Bevin reforms, and the Home reforms in the 1960s. Is the Foreign Secretary convinced that the CPRS is the best means of carrying out such a review? The terms of reference are indeed very broad, perhaps rightly so. The task of considering the functions of British diplomacy in all its aspects is an enormous one. The CPRS—I set it up—was not founded for such a purpose nor do I believe that its staff is properly equipped for such a purpose. While I would welcome a review of this kind, I must take leave to doubt whether the head of the CPRS and his staff are properly and adequately equipped and are suitable for this task, especially if they are to carry out the other activities for which the CPRS was formed.

Mr. Callaghan: I considered this matter, too, and I considered the alternatives. One immediately springs to mind. On balance, I believe that with the present level of staffing—and it will be strengthened—the CPRS can do this job. We shall see the quality of its report when it emerges. I do not undertake to agree with it when it is received, but I

hope that I shall be able to do so. I have said to Sir Kenneth Berrill that I hope that he will consult the widest range of outside interests on this matter and associate them with his work, including, for example, the staff side.
The right hon. Gentleman was right to make his initial point. I made certain that this matter was discussed with the staff side before we launched on it although, as was made clear to it on my behalf, this is not basically a staff matter. It is a functional review from which certain staff changes may result. I hope that we have chosen the right instrument. Let us all give the CPRS all the help we can in discharging its task.

Mr. Lipton: Will this review make impossible a repetition of the scandalous waste of public money involved in providing a house in Paris for many thousands of pounds for a member of the British Embassy staff?

Mr. Callaghan: Yes. Without taking up my hon. Friend's adjectives, it will be part of the task of the review to look at the level, scale and appropriateness of entertainment allowances and matters of that sort.

Mr. John Davies: Is the right hon. Gentleman aware that I have had the good fortune to have recent experience of the efficacy of our missions in the Middle East and that my experience was that they serve both commercial and political interests with great intelligence and ability? Will the right hon. Gentleman give the House the assurance—I do not think he has yet given it—that the CPRS report, when it is produced, will be made available publicly, particularly to the House?

Mr. Callaghan: I was pretty guarded about this. I said that I shall inform the House of the conclusions of the report. There may be some sensitive matters that might not be appropriate for publication. I hope that the right hon. Gentleman—and I thank him for what he has said about the work of this excellent service—will take it from me that in setting up the review my purpose is not to hide anything but to expose the whole situation so that we can have an efficient service. I shall, therefore, publish as much as I can.

ARGENTINA

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): With your permission, Mr. Speaker, and that of the House, I will make a statement on our relations with Argentina.
Our traditional friendship with Argentina is marred only by issues arising from the Argentine claim to sovereignty over the Falkland Islands, whose inhabitants wish to remain British. Successive British Governments have undertaken to respect their wishes. At the same time they have recognised that the long-term interests of the Islanders must lie in practical forms of association with the Argentine mainland. It was to this end that, between 1971 and 1974, Her Majesty's Government and the Argentine Government negotiated a series of arrangements designed to improve communications between the Falkland Islands and the Argentine mainland. During 1975 a further significant development took place, namely recognition by all concerned, including the Islanders, that the future development and diversification of the Islands' economy could take place only in a spirit of co-operation with Argentina.
This is the background to the series of discussions I have had with successive Argentine Foreign Ministers. When I saw Senor Robledo, the then Argentine Foreign Minister, in New York last September, I put to him the proposition that our two Governments should consider discussing the possibilities of economic co-operation in the South-West Atlantic region. I reminded him of what I said to his predecessor about the report of Professor D. H. Griffiths on the hydrocarbon prospects of the region, a copy of which I had had made available to his predecessor. I informed him that we were setting up an economic survey of the Falkland Islands. Its purpose is to quantify the options for future economic development.
As the House knows, this survey is being held at the request of the Islanders. My right hon. Friend the Minister for Overseas Development obtained the services of the Economist Intelligence Unit as consultants for the survey, and we were fortunate in securing a highly qualified

leader in the person of Lord Shackleton. However, after the nomination of Lord Shackleton in October, the Argentine Government stated that the survey would not be welcome to them.
On 17th December I had the opportunity, while in Paris, of reviewing developments with the new Argentine Foreign Minister, now Senor Arauz Castex. I gave him a full explanation of the essentially independent nature of the economic survey. Unfortunately, it has not so far been possible to find the means of bridging the gap between my proposals for talks on economic co-operation and Argentine insistence on simultaneous negotiations about the transfer of sovereignty.
As the House is aware, the Argentine Government have stated that the Argentine ambassador, who returned to Argentine in October, will remain in Buenos Aires until further notice and that, in view of the present state of affairs over the Falklands question, it would be advisable for the British Government to withdraw our ambassador. I have also received personal messages from the Argentine Foreign Minister to which I shall be sending a substantive reply in due course. Meanwhile, I shall shortly be recalling Her Majesty's ambassador for consultations.
It remains my conviction that, given good will on both sides, Britain and Argentina should be able to transform the area of dispute concerning sovereignty over the Islands into a factor making for co-operation between the two countries which would be consonant with the wishes and interests of the Falkland Islanders.

Mr. Maudling: This is a rather serious development. Is the right hon. Gentleman aware that we entirely share his objective of getting agreement with the Argentinians, bearing in mind always our responsibility to the Falkland Islanders? Can the right hon. Gentleman say to what extent he thinks that this development is a transient phenomenon related to Argentine domestic problems? How does the Shackleton mission stand now? Can it carry out its task? Finally, can the right hon. Gentleman say who will look after British interests and British subjects when the ambassador is recalled?

Mr. Callaghan: I do not want to comment on any internal reasons which had led to this decision by the Argentine Government. Their stated public reason is our refusal to discuss the transfer of sovereignty of the Islands, and that is what they will stand on. As for our representation when our ambassador leaves, I am sorry to say that I cannot yet give the right hon. Gentleman an answer to his question. I will make the answer public as soon as I can. Lord Shackleton is carrying out his survey at present and can do that unhindered. He will report to us in due course, when he returns.

Mr. Thorpe: Is the right hon. Gentleman aware that those who wish to remain British ought to be allowed to do so? Can he say whether the Argentinians have made any suggestion to the effect that they would wish in any way to be associated with the Shackleton mission—or did they oppose it from the beginning?

Mr. Callaghan: There are two contradictory positions concerning the right hon. Gentleman's first point. There is the United Nations resolution which urges Her Majesty's Government and the Argentine Government to proceed with negotiations to find a solution to the problem. That is what we have been seeking to do, trying to get economic co-operation between the two Governments. I believe that this could lead to other changes if we work together economically. So far I have not been able to convince the Argentinian Government of that.
The second, contradictory, resolution is No. 1514 of 1960 which enshrines the principle of self-determination. That is the one on which we stand. The talks I had with the Argentine Foreign Ministers were confidential, but I can say without breaching the confidence that at one stage I was hopeful that there might be some co-operation in the fulfilment of this mission.

Mr. Conlan: Will my right hon. Friend recognise that this unilateral action by the Argentine Government will be seen as a piece of extreme provocation and that the 2,000 British inhabitants of the Islands will view it with grave anxiety? Does he recognise that this development will increase the likelihood of armed aggression by regular or irregular forces?

What steps is he taking to safeguard the interests of the Islanders against incursions from the mainland?

Mr. Callaghan: I realise that this development will cause grave anxiety to the inhabitants of the Islands, especially as they realise that, in their isolated position, co-operation with Argentina is necessary if they are to survive and thrive. The only alternative to the air services is a ship which now calls only four or five times a year. This is why I am trying to avoid heightening tension in this matter. For the same reason, I am sure the Argentine Government would not resort to armed attack. There was an attempt by some irregular forces to try this, but the Argentine Government dealt with the matter. I am sure that they would continue to take the necessary action in the same way. I should have known the answer to the question put by the right hon. Member for Chipping Barnet (Mr. Maudling). I can tell him now that after our ambassador leaves, the embassy will remain under the chargé d'affaires.

Sir Bernard Braine: Is the right hon. Gentleman aware that the Islanders' main anxiety—and this has existed for a long time—is that Argentina controls their air communications with the outside world? These people are wholly British and if they are to be allowed to remain so, as they wish, does he realise that there is an imperative need to provide a replacement airfield with runways long enough to enable planes with the appropriate payloads to take off to countries other than Argentina?

Mr. Callaghan: There is an airfield on the Islands and since 1971, under an agreement with the then British Government, Argentina has operated regular air services between the Islands and Argentina. It was right to encourage that development. The simplest and best way of travel for the Islanders in their exposed corner of the world, 480 miles north-east of Cape Horn, is through Argentina. Any other way is extremely expensive. At a time when we have many other considerations in hand, and the hon. Member is never backward in calling upon us to rein back public expenditure, he is now suggesting expenditure of many millions of pounds. He has to take this into account. I hope he will


look at the matter against the same background as that against which I try to look at it. We should try to get Argentina to recognise that economic co-operation is the way forward if they want good relations with the Falkland Islands.

Mr. Dalyell: Has the Foreign Secretary's Minister of State warned him of the awkward fact that it is not only Argentina but also other countries in South America which take a strong view on this matter? Would it be so terrible if the Falkland Islands were to link up with Patagonia, which, like so much else in life, is run by the Welsh?

Mr. Callaghan: I do not know whether my hon. Friend is trying to make trouble between me and the Minister of State by asking what he has warned me about. I talk to my hon. Friend so aften that I am not always sure of what he has said to me. As regards a link between the inhabitants of the Islands and elsewhere, they must be free to choose their own destiny in this matter. [Hon. Members: "Ah!"] I have no doubt that if a referendum were held in the Falkland Islands, it would show an almost 100 per cent. desire to remain with Great Britain. If a referendum were conducted here about whether Scotland should remain part of the United Kingdom, I leave it to others to say what the result would be. It is the same situation. I hope that we shall not have very many more "Ahs". On the question of the Welsh running these matters, I can only say that they are in very good hands. It makes a bit of a change from the Scots, anyway.

Mr. Luce: Is the Foreign Secretary aware that I welcome the fact that he has reaffirmed that there will be no change in the sovereignty of the Falkland Islands without the full consent of the Islanders? Does he agree that since the 1971 Buenos Aires communications agreement, there has been a marked improvement in social and economic co-operation between Argentina and the Islands? However, does he accept that the unilateral action of the Argentine Government and their poor treatment of the Shackleton mission, is putting that improved co-operation in jeopardy, and will he put that point of view in robust terms to the Argentine Government?

Mr. Callaghan: I agree with what the hon. Member has said. Social and economic argument is vital for the future of the Islands, if they are to thrive. It would also be helpful to both Argentina and Great Britain if there were economic co-operation between our two countries. I am not saying whether the balance of advantage would lie more with Argentina or with Great Britain, but such a development would be advantageous and I have made this point on many occasions to three successive Argentinian Foreign Ministers.

Mr. James Johnson: I do not wish to minimise the diplomatic difficulties and niceties inherent in a situation so long disputed as this, but is my right hon. Friend aware that we all wish him to stand steadfast behind the 2,000 Islanders, who are people of our own stock? They are basically dependent on about 1 million sheep, but is my right hon. Friend aware that a firm in my constituency, Thomas Boyd and Sons, surveyed these waters and, besides the likelihood of oil being found, there are enormous stocks of South Atlantic cod, and in view of our difficulties with limits in the North Atlantic, will my right hon. Friend bear this in mind, not only for our own future but also for that of the 2,000 people on those Islands?

Mr. Callaghan: I am aware of this fact. It is one of the specific propositions I put to the Argentine Foreign Minister in September. I suggested that there should be joint research into the fishing of krill and other resources off South Georgia and elsewhere where there is considerable room for exploitation. I was hoping that we could have proceeded along these practical lines. Although I put these arguments forcefully, they did not find acceptance because of the insistence by the Argentine Government that we must discuss the question of sovereignty. I even said that although I was not empowered by Parliament or the inhabitants of the Islands to discuss the question of sovereignty, I would advise our representatives to listen to anything they had to say without entering into a dialogue about it, but that was also found to be unacceptable.

Sir John Gilmour: The southern part of Argentina is populated not only by a number of Welsh people but very largely by Chileans, and this makes the claim


of the Argentine to sovereignty over the Falkland Islands rather hollow. I have had the good fortune to visit the Falkland Islands over the last two months and that leads me to suggest that the greatest assurance the right hon. Gentleman could give the Islanders would be to ensure the presence of one of Her Majesty's ships in these waters in the coming months.

Mr. Callaghan: The "Endurance" is there at present with the Shackleton mission, and two other ships are available. I believe that the greatest assurance we could give, if only it were possible to attain it, would be that we can get good relations with the Argentine in economic co-operation. That, I believe, would be the greatest assurance for this isolated community.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 23RD JANUARY

Members successful in the Ballot were:

Mr. Phillip Whitehead.
Mr. Ian Wrigglesworth.
Mr. John Stanley.

DEVOLUTION (SCOTLAND AND WALES)

[SECOND DAY]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pendry.]

4.2 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): In opening the debate yesterday my right hon. Friend the Prime Minister explained the strategy and reasoning behind the White Paper. In reopening the debate today, I should like to speak in some detail about the content of the White Paper but more especially about the constitutional arrangements and procedures.
I hope that later in the debate my right hon. Friends the Secretaries of State for Scotland and Wales and the Paymaster-General will be speaking about the particular problems which face Scotland and Wales and about the economic and financial aspects.
Whatever else may be said about the White Paper—and an awful lot has been said about it—it has at last succeeded in bringing the devolution debate to life throughout the United Kingdom. In Scotland and Wales the debate has been going on for some years, but elsewhere, and notably in this House, there has until recently been very little general interest. For their part the Government have tried throughout to make their intentions clear. A previous Labour Government set up the Royal Commission on the Constitution. When we came back to office in February 1974 we said immediately that we would start discussions. We prepared the consultative document "Devolution within the United Kingdom—some alternatives for discussion". In the ensuing months in the summer of 1974 my right hon. Friends the Secretaries of State for Scotland and Wales held widespread discussions in those two countries on the basis of that document.
On the result of those discussions we prepared and published in September 1974 the White Paper "Democracy and Devolution" setting out a definite commitment to establish Scottish and Welsh Assemblies. This promise was repeated in our three General Election manifestos


in Scotland, Wales and the United Kingdom in the October 1974 General Election. It is always difficult to say what are the criteria for deciding whether or not a Government have a mandate. Let me tell the House what we put before the electorate—and I can assure my hon. Friends that this was approved by the National Executive Committee of the Labour Party. In our Scottish manifesto we said:
We shall therefore give high priority in the next Parliament to the setting up of a Legislative Assembly for Scotland with substantial powers over the crucial areas of decision making in Scotland.
In Scotland we won 41 out of the 71 seats.
Labour's manifestos at the last two General Elections have included a pledge to set up a directly elected assembly for Wales",
and in Wales we won 23 out of 36 seats. Our manifesto for the United Kingdom as a whole said:
The next Labour Government will create elected assemblies in Scotland and Wales
and we won a million more votes and 42 more seats than the Conservative Party. If any Government could claim to have a mandate for its proposals, we have a mandate for this one in Scotland, Wales and throughout the United Kingdom. We are now honouring that promise.

Mrs. Margaret Bain: Does the right hon. Gentleman accept, irrespective of the small print in the Labour Party manifesto, that the Labour Party in Scotland fought a campaign which emphasised that the people of Scotland would have a strong Assembly with powers over trade and industry? Statements appeared in the Press in Scotland giving this undertaking and the hon. Members for Berwick and East Lothian (Mr. Mackintosh) and South Ayrshire (Mr. Sillars) emphasised the point in their party political broadcasts. Does the right hon. Gentleman now accept that the White Paper is a sham?

Mr. Short: No doubt the hon. Lady will catch your eye, Mr. Speaker, but before she does so I invite her to get a copy of the White Paper which was published in September 1974. I hope she will read it before she speaks, because she will see there what we said about trade and industry and that what she said in her intervention was quite inaccurate.

Mr. Russell Johnston: rose—

Mr. Short: I cannot keep giving way throughout my speech.

Mr. Johnston: I am grateful to the Leader of the House for giving way. Will he explain why, in United Kingdom terms, he made the point that the Labour Party had won a million votes more than the Conservatives and therefore had a mandate while for Scotland he concentrated on the number of seats won? In Scotland his party secured 36 per cent. of the vote and 57 per cent. of the seats.

Mr. Speaker: Order. I have been given notice that the hon. Member for Inverness (Mr. Johnston) will be seeking to catch my eye to speak in the debate today. That would be the time to make that sort of point.

Mr. Johnston: On a point of order. Surely, Mr. Speaker, the whole point of the nature of this House is that it should be an interchange of discussion and debate. Is it your view that it is wrong for Ministers or speakers to give way to discursive interventions?

Mr. Speaker: If the hon. Member is raising a matter of argument and knows that he has a very good chance of being called to speak in the debate, he has an option. If he chooses to make his argument in an intervention, perhaps he will not catch my eye later.

Mr. Short: After the October 1974 election, after all the promises were made and after the mandate which was secured by the handsome election victories in Scotland and Wales—an election which was, perhaps, less handsomely won in the United Kingdom as a whole—and after two years of very hard work, our detailed proposals have been published in the White Paper we are now discussing. Perhaps I should say to my hon. Friend the Member for Bedwellty (Mr. Kinnock) that the White Paper goes not one inch beyond the White Paper of September 1974 in any single respect. We are honouring our promise to the electorate in exactly the way we made it.

Mr. Neil Kinnock: I apologise to my right hon. Friend for intervening, because he has an extremely difficult task to perform. Will he point


out where, in the manifesto, in the previous White Paper or in Labour Party documents, an undertaking was given to institute an Assembly for Wales which had tax-collecting powers of any description? Does he not recognise that this is where the White Paper, as in other areas, departs from anything we have undertaken to do previously?

Mr. Short: What we undertook to do previously was set out in the White Paper I have just described which was before the electorate at the last General Election. My right hon. and learned Friend the Secretary of State for Wales is armed with all the statements made by a great many Welsh Members over the years, including Mr. Deputy Speaker, and he will quote from them when he speaks tomorrow, so I shall not pursue that point today.
A shorter, popular version of the White Paper is this week available in every post office in Scotland, and every household in Scotland can get a copy of that White Paper any time this week or in the ensuing weeks. [Interruption.] I know that the hon. Member for Dunbartonshire, East (Mrs. Bain) does not want it to be properly understood, but we are making sure that it will be properly understood. I and many of my colleagues are going to Scotland next Sunday and on many Sundays to come, and my hon. Friends intend to make sure that the people of Scotland and Wales understand the proposals properly.

Mr. Dafydd Wigley: rose—

Mr. Short: They are available in Wales as well.

Mr. Wigley: Will the right hon. Gentleman explain whether the White Paper available in Wales, but not available last night in the Vote Office, indicates why the Government are not giving economic planning powers to the Assembly for Wales, which was a commitment in their manifesto for Wales in the last General Election?

Mr. Short: That was not a commitment. I am not talking about that at the moment. I cannot talk about everything at once, and I hope that hon Gentlemen will contain themselves.
The way is now clear for increasing understanding and discussion of the Gov-

ernment's proposals. Nearly 400 bodies have been written to individually—the list was published in Hansard yesterday—inviting comments. I hope that the national parties will look at that list. There is a similar general invitation to the public.
I quote paragraph 5 of the White Paper. It is important and it is the purpose of this debate. It is as follows:
The Government now want to see full public and Parliamentary consideration of the proposals. The issues are extremely important for all the people of the United Kingdom; the arrangements proposed are novel; and in constitutional matters, where frequent change would be harmful, there is need for the widest possible basis of agreement on the essential features before legislation is enacted which will inevitably be very complicated. The main structure of the schemes is clear, but they need not represent the last word in every respect. The Government will therefore be very willing to listen to representations about their proposals that are consistent with the basic approach set out in Part II of this White Paper.
By "basic approach" we mean that there should be the maximum amount of devolution of subjects of government consistent with preserving the political and economic unity of the United Kingdom. What we mean by "political and economic unity" is set out in some detail in paragraphs 19 and 20 of the White Paper. We are aiming for the greatest possible long-term advantage for the people of Scotland and Wales within the United Kingdom.
In paragraph 294, the White Paper points out that our proposals are designed to strike two careful balances. The first is between, on the one hand, allowing the maximum local freedom and initiative and, on the other hand, safeguarding the unity of the United Kingdom. The second balance is between, on the one hand, maximising local democratic control over the allocation of expenditure on the public services and, on the other hand, the continuing responsibility of Parliament here at Westminster for managing the economy and ensuring that all parts of the United Kingdom, especially those whose need is greatest, get a fair share of the resources of the nation as a whole. Any suggestions from this House or otherwise for modifying our proposals we shall listen to, but everything that everyone says must pay regard to those considerations if they are to command widespread


acceptance. Given that basic approach, and given the two balances I have mentioned, we are willing to listen to and consider any proposals made here or outside.
The consultations now under way—I mentioned the 400 people I have written to—as well as this four-day debate will lead to the publication of a draft Bill in the spring of this year. As I have already explained—and anyone who understands how the House works will know—a Bill of this complexity could not be put through Parliament this Session. Nevertheless, we shall publish the Bill as soon as we can in draft form. It will then be debated and there will be further and more definitive discussions with outside bodies on the basis of the Bill. The next stage will be that a Bill taking into account both the discussions on the White Paper and the more definite discussions on the Bill will be published at the beginning of next Session. I am confident that that Bill will reach the statute book by the end of next Session.
On the assumption that the devolution Bill will go through in the Session 1976–77, it may be possible to hold the first Assembly elections towards the end of 1977, but it would be more realistic to think in terms of spring 1978. The Assemblies will take over responsibility as soon as possible after they are elected, but there are problems—solvable but nevertheless considerable. For one thing, the Assemblies will be completely new institutions and there will be a need for a running-in period. They will not only have to make their own domestic arrangements, draw up standing orders and so on, but will be involved in negotiations for the first block grant.
Also, the transfer of executive powers from the Scottish and Welsh Offices will take some time. This running-in period will be as short as possible, but it is inevitable that there should be a period of this kind between the election of the Assemblies and the full assumption of their powers. They could hardly take over full responsibility on the day they were elected. However, these are practical, soluble problems and, naturally, we are anxious to get the Assemblies fully operative as soon as possible. There will be no avoidable delay.

Mr. William Whitelaw: The right hon. Gentleman speaks of a draft Bill. Are the Government wedded to the idea of one Bill? The positions of Scotland and Wales are very different. Might it not be wise to have two Bills, one for Scotland and one for Wales?

Mr. Short: That point and anything else which the right hon. Gentleman says I shall consider carefully. Our present intention is one Bill, but I shall certainly consider that aspect.

Mr. George Reid: I should like to give the right hon. Gentleman a chance to clear up two apparent hostages to fortune. The Under-Secretary of State for Scotland with responsibility for devolution said in a fully authorised interview in January last year that he hoped that the Scottish Assembly would have trade and industry powers. In view of what the right hon. Gentleman says, does the Under-Secretary of State still have grounds for hope? Secondly, would the right hon. Gentleman care to comment on his own view, expressed to the Scottish Executive of the Labour Party in April, that the major Bill in the next Session—that is, this Session—would be the devolution Bill?

Mr. Short: My right hon. Friend the Paymaster-General will be speaking specifically about the first question raised by the hon. Gentleman. The main problem is that many of the industry powers are a matter of holding the balance between one part of the United Kingdom and another. My right hon. Friend will speak in detail about that, and I hope that other hon. Members will also express their view. The hon. Gentleman is right in his second point. We have proceeded on the exercise and we have met new difficulties all the way along the line. It has taken longer than we expected and I apologise for it, but it is unavoidable.
I turn now to some of the more detailed contents of the White Paper. Some aspects of it have been misunderstood. That is inevitable in a scheme of this complexity. For example, yesterday the right hon. Lady the Leader of the Opposition said:
I do not believe this scheme will stand the test of time. Its constitutional basis is too


flimsy."—[Official Report, 13th January 1976; Vol. 903, c. 240.]
I know that the right hon. Lady has been extremely busy, but I wish that she had studied the White Paper more completely. Whatever may be said about it, that certainly cannot be said. Right hon. and hon. Members may have views about the subjects to be devolved, but no one can say that the constitutional basis is too flimsy. Most critics have said exactly the opposite—that the constitutional basis is too strong for the powers being devolved—but certainly that cannot be said. Perhaps the Leader of the Opposition would care to read it a little more carefully this weekend.

Mrs. Margaret Thatcher: have read everything in it several times. It was because I had read everything in it, and because I had studied several federal systems as well, that I realised that the constitutional basis of what the right hon. Gentleman is proposing is very flimsy indeed. When he adds to that a political veto I think it is absurd.

Mr. Short: I am coming to the so-called political veto, and I shall show the absurdity of what the right hon. Lady said yesterday, and of what she is saying now, about the so-called political veto.
I turn now to the proposed reserve powers for the United Kingdom Parliament. These have been called by the right hon. Lady, somewhat emotively, political veto powers. The White Paper, rather inelegantly, calls them "override" powers. They are described in paragraphs 71 to 75 and paragraphs 207 to 210 of the White Paper.
Far too much attention has been concentrated on these reserve powers. The considerable powers being devolved are being forgotten and a great deal of the talk is polarising around the reserve powers, which are merely a constitutional convenience to the—[Interruption.] Let me explain what I mean, because hon. Members have missed the essential point here. I want to explain it in terms which they can understand.
These powers would be very very seldom used. My guess is that they would hardly ever be used, because their frequent use would obviously be politically impossible. The essential point in this exercise is that the United Kingdom Par-

liament cannot ever permanently divest itself of its sovereignty over the United Kingdom as a whole.

Mr. J. Enoch Powell: Except to Brussels.

Mr. Short: That could be undone by an Act of Parliament.

Mr. Powell: And it will be.

Mr. Short: Whatever the future may hold, the right hon. Member for Down, South (Mr. Powell) and I are agreed that it could be undone by an Act of Parliament, so my proposition is correct. This Parliament can never divest itself of its sovereignty, except possibly in one case, and that is if it granted complete independence to part of the United Kingdom. Even then, it is very doubtful as a legal proposition. International law and world public opinion would prevent its ever being taken away. That is the only case in reality in which this Parliament can divest itself of its sovereignty over part of the United Kingdom.
Whether it is written in the devolution Act or not, this Parliament will always have a power of intervention. What we are proposing is a simplified form of intervening when the interests of the United Kingdom as a whole are threatened. That is not by passing an Act of Parliament but by securing the approval of Parliament on an affirmative resolution in both Houses. As I said before, the existence of this simplified power of intervention in the background has enabled us to propose a far greater devolution of powers in individual subjects than would have been possible without it.
I wish that more people would grasp the essentially formal nature of these reserve powers and stop talking as though the Government intend to intervene every five minutes. These powers are simply a reflection of the central constitutional fact about devolution—that this Parliament remains sovereign and the United Kingdom remains a unitary State. These arrangements provide simplified machinery for expressing that. The people who oppose the power of intervention, as did the Leader of the Opposition yesterday—[Interruption.] The right hon. Lady opposed it. I read carefully this morning what she said, and she is not in favour of any power of intervention.


Those who oppose intervention are not advocating devolution but are advocating something quite different. If there is no power of intervention, either in the way we propose or by Act of Parliament, it will mean either federalism—and that is uncertain—or complete separation.

Mrs. Thatcher: No.

Mr. Short: Of course it does.

Mrs. Thatcher: rose—

Mr. Short: I will give way to the right hon. Lady. Yesterday she opposed the power of intervention. If there is no power of intervention, Scotland and Wales will become independent.

Mrs. Thatcher: By virtue of what the right hon. Gentleman said a few moments ago, that is not correct. Because Parliament is supreme, intervention would come by virtue of another statute.

Mr. Short: That is exactly what I am saying. I was providing only a simplified form of that intervention. But whether or not we have that in the Act—the right hon. Lady understands quite well what I am talking about—there is a power of intervention by Act of Parliament in this Parliament. Parliament can always intervene by Act of Parliament. Therefore the right hon. Lady cannot say that she does not want a power of intervention.

Mr. Henderson: rose—

Mr. Jeremy Thorpe: rose—

Mr. Deputy Speaker (Mr. George Thomas): Will the Lord President decide to which hon. Member he is giving way?

Mr. Henderson: I am most grateful to the right hon. Gentleman. I sympathise with him in his difficulty in finding some explanation of the Conservative Party's policy on this matter, which may be cleared up later. If, as he is saying, this is a power which is so politically damaging that it would be used only very infrequently, why insult the Scottish people by putting it in at all? Does the right hon. Gentleman really imagine that the people of Scotland will be conned into thinking that they have power to make decisions if the Secretary of State for Scotland is then able to veto them?

Mr. Short: Perhaps I can say something presently which may help the hon. Gentleman. The only way in which the United Kingdom's power of intervention can be removed is by a permanent surrender of sovereignty—that is, by granting independence or by a total reconstruction of the political institutions of the United Kingdom. That is what I meant when I said that I wished that the Leader of the Opposition had thought about this a little more carefully.

Dr. M. S. Miller: Will my right hon. Friend make it clear once and for all that the people of Scotland cannot have it both ways? If they want to remain within the United Kingdom, it is absolutely essential that the United Kingdom Parliament must have reserve powers. If these reserve powers are not there, it amounts to what some hon Members opposite are saying—that the Scottish people want complete separation from the rest of the United Kingdom.

Mr. Short: That is precisely what I am trying to point out—that we cannot remove the power of intervention in our constitution without granting independence. As the White Paper points out in paragraph 27, it is very difficult to predict situations which might lead to the use of these reserve powers. It is largely for this reason that the Government propose that they should be provided rather than that we should attempt to deal specifically with every possible eventuality.
A mere difference of opinion between London and Edinburgh or Cardiff would not be a basis for intervention—and I believe, as I said a minute ago, that it would be politically impossible—but an executive act or omission, or a proposed statute which clearly threatened the United Kingdom interest would be such a basis. Between the two, it is almost impossible to predict situations which would trigger off the reserve powers.
It is not helpful to speculate about situations in which the Government might wish to secure parliamentary approval to intervene. What we are aiming at is not intervention but consultation and co-operation. This is abundantly clear at several points in the White Paper. Paragraphs 74 and 209 specifically state that the general procedures for intervening in the business of the Scottish and Welsh


administrations are not intended for frequent use. Paragraph 25 states:
Arrangements will be needed for extensive but flexible consultation on many subjects and at all levels, political and official. Through these the Government and the devolved administrations will keep one another informed and will work together as closely as possible. Interests will sometimes differ, and give and take will be needed. But the Government see no reason to fear that the longstanding spirit of partnership within the United Kingdom will be lost; indeed, they believe"—
and believe profoundly—
that it will be enhanced. They look forward to working out effective two-way consultation arrangements with the devolved administrations as soon as possible, and to operating them constructively over the years.
I was very sorry that the greater part of the speech by my hon. Friend the Member for West Lothian (Mr. Dalyell) saw nothing ahead but obstruction. I have more faith and confidence in the good sense of his fellow countrymen than he has.
I hope that what I have said has done something to reassure those who feared on a first reading of the White Paper that the reserve powers would undermine the whole concept of devolution. Such fears are completely groundless. However, if a substantial body of opposition appears and if a substantial body of opinion wishes to have these powers removed, certainly we shall consider that. But I make it absolutely clear so that there will be no doubt that, whether or not they are written into the devolution Bill, it is inherent in our constitution that they will still exist, admittedly by Act of Parliament. There will still be the power here to set aside any statute or any executive act of either of the Assemblies.

Mr. Thorpe: This is very important. I do not make a point of this but, for the sake of the record, when the right hon. Gentleman refers to paragraph 58 is he saying "These are the powers that we shall devolve to you in the Scottish Assembly. We reserve the right to veto them if they are ultra vires. We reserve the right to veto them if they are intra vires if we take the view that they are not acceptable on general policy grounds. But we cannot tell you what are those general policy grounds. We hope that they will not arise"? If that is the position, it is a minimal offer to Scotland.

Mr. Short: If there is opposition to these being included in the Bill, I shall be willing to look at it. But whether they are in or out, the power to intervene is still there, and unless we give complete independence and, maybe, federalism—probably complete independence—the powers of intervention will still remain because they are inherent in our constitution. That is the central fact about devolution.
A misapprehension has arisen over the constitutional duties which are allocated in the White Paper to the Secretary of State. I cannot understand why, but this too has polarised a good deal of opposition. It applies especially to the Secretary of State for Scotland.
The constitutional side of the scheme which we propose involves a hierarchical role for some representative of the United Kingdom. Obviously some person must formally appoint the Scottish Executive, present Bills for Royal Assent and so on. It seemed to us that the Secretary of State was the best placed person to perform these duties.
The pattern of this is familiar to us. The Secretary of State for Scotland, like most Ministers, in addition to his executive and political functions also has a wide variety of formal and quasi-judicial functions, I myself, as Lord President of the Council—which is the highest court of appeal for a number of Commonwealth countries—perhaps to a greater extent than any other Minister.
This combination of rôles, formal and sometimes quasi-judicial rôles and, on the other hand executive and political rôles, is a normal part of the political scene in this country. It may seem illogical, but anyone who has been a senior Minister will know that it does not give rise to conflict and that it works extremely well.

Mr. Donald Anderson: In paragraph 49, the Secretary of State has the power to dismiss the Executive and presumably, following that, to appoint another—a rôle analogous to that of the Sovereign in the United Kingdom situation. Does my right hon. Friend believe that a partisan figure, the Secretary of State, in the highly-charged political atmosphere of the Scottish Assembly, can carry out this function without immense trouble?

Mr. Short: It is exactly about that that I have been talking. All Ministers in this country have varying rôles which in logic may appear to conflict but which in fact do not conflict. I am the head of a body which is the highest court of appeal in the Commonwealth. I am also a politician, and I make no bones about it. But the two rôles do not conflict. We are familiar with this, and, as I say, it works extremely well.
It should be remembered also that the Secretary of State will continue to be a member of the United Kingdom Government. In any circumstances in which the exercise of his constitutional rôle might give rise to controversy—for example, if the rejection of an Assembly Bill or Executive intervention were to be considered—it is clear that the decision would be one for the United Kingdom Cabinet and this Parliament as a whole. My right hon. Friend would be answerable here.
In general, however, the constitutional functions which we propose for the Secretary of State would be routine and formal. He will rely heavily on the advice of the Scottish administration in carrying them out.

Mr. Powell: Will the right hon. Gentleman explain why he said that there must be someone to appoint the Executive responsible to the Scottish Assembly if that does not apply in the case of an elected local government assembly which also has an executive?

Mr. Short: Almost one of the first problems to be resolved in this exercise was where executive power should reside. That was almost the first major question to be resolved. In the case of a local authority, executive power lies in the local authority itself. Here at Westminster, executive power lies in individual Ministers. This is the system which we are proposing in the case of Scotland but not of Wales. In Wales the executive power will reside in the Assembly and its committees. In Scotland it will reside in the individual Ministers. That is the reason why.
If anyone wishes to oppose and change these arrangements, he should suggest who, apart from the Secretary of State, could more appropriately and more effectively perform the constitutional functions allotted to him in the White

Paper, because clearly they have to be performed by someone. Hon. Members who object to this—it is remarkable to me that they do, because I think that it is eminently sensible—will perhaps be good enough to put forward alternative proposals.
We have to bear in mind also, in view especially of one poll that I saw, that there is a great deal of support in Scotland for preserving the office of Secretary of State.

Mr. Henderson: The right hon. Gentleman issued an invitation. I think that it would befit the dignity of the Scottish Assembly if it was the Sovereign or the Sovereign's representative who carried out these functions.

Mr. Short: I note what the hon. Gentleman has said.
The third feature of the proposals around which criticism has tended to polarise is the arrangements for checking the vires of Scottish Bills. As in the case of the constitutional functions of the Secretary of State, this must be done by someone. In the case of a devolved administration where its powers to legislate are defined in an Act of Parliament of this Parliament, there must be some mechanism for checking whether a statute of that Assembly falls within its devolved powers. Someone must do it. There is no avoiding the need for machinery for this purpose.
The White Paper explains this in paragraph 56 and the paragraphs following it. These paragraphs are presentationally at fault, I think, in treating vires together with the consideration of Bills on policy grounds in the same part of the White Paper. But we have been trying to keep the material as short as possible.
The examination of vires would be a comparatively routine question of whether the provisions of a Bill were within the powers already laid down in the devolution Act. But the checking of the vires is seen more as a matter of law—indeed, as a matter of law and not as a matter of politics. No doubt some awkward points will arise, perhaps on matters not foreseen when the devolution Act was passed—but in the ordinary course no difficulty should arise.
The three-stage checking mechanism which we propose to operate is described


in paragraph 56 of the White Paper, and perhaps I might quote part of the paragraph:
The Assembly's presiding officer"—
that is, the clerk to the Assembly—
on the advice of his counsel, will report to the Assembly on the vires of a Bill (that is, whether it falls within the devolved powers) when it is introduced, and again before the final Assembly stage; if the report is adverse it will not stop the Bill but will serve as a warning to the Assembly and the Executive. The Government will not be formally involved at these stages, but they will be aware of the Bill and the presiding officer's report and may wish to give informal warning of any difficulties about vires which they foresee. The Scottish authorities will be similarly free, if in doubt, to conslt the Government informally.
The remaining question is what further legal advice is necessary before the Government submit the Bill for Royal Assent. The White Paper proposes that the Government should be advised by the Law Officers, and these include the Lord Advocate. Other suggestions might be made. The Leader of the Liberal Party made one yesterday. For example, it might be thought that advice should be given by a panel of judges or by the Judicial Committee of the Privy Council. No doubt other ideas will be put forward, and we shall consider them, but I think there must be a third stage.
The Government's own view is that the processing and passing of an Act of Parliament for a statute of the Scottish Assembly is a matter for the parliamentary machine. The introduction of a formal judicial process into that operation might well create constitutional confusion. It is Parliament and politicians who are answerable to the people for the content of Acts passed and not judges. That is why we propose that the final advice on vires should be given to the Secretary of State by the Law Officers. There are different points of view about this, and we shall consider them.
The related and extremely vital question of judicial review of Acts when they reach the statute book is dealt with in paragraphs 62 to 65 of the White Paper. This again applies only to Scotland, and it is an issue left open for public discussion. I want to be quite honest about this. We differ in the Government in our views, and we want to hear the different points of view before coming to a decision.
The question is whether, after Royal Assent has been given, an Assembly Act should be open to review in the courts on the grounds of vires—that is, whether the courts should have jurisdiction to declare, at the instance of a litigant, that an Assembly Act goes outside the powers conferred by the devolution Act. I will not go into the Opposition's arguments, which are already summarised in the White Paper, but I was sorry that the Leader of the Liberal Party described this proposal yesterday as the Franco clause. I think that it is a very honest clause.
I must emphasise the distinction between the question of judicial review after the Act is passed and the question, just discussed, of checking the vires of an Assembly Act before it is passed—related though they are.
Judicial review is concerned with the application of an Assembly Act in particular cases which may well come up many years after the Act has been passed. Some litigant may question an Act 20 to 25 years later. There is no doubt that in such circumstances the courts could interpret the words of the Act as they can the words of our Acts, but they could not question the validity of an Act of Parliament. That has been their traditional task.
The question is whether they should have the power to go further and say that an Act of the Scottish Assembly cannot be applied because it is, in effect, invalid. They cannot do that with Acts of Parliament, and it would be a completely new departure for this country, should they, in the rather different circumstances, be able to with Acts of the Scottish Assembly—particularly after the method for checking the vires of Acts before they reach the statute book which I have just described.
This is not a dry legal issue. It is a highly important question not unconnected with the debate which has been going on for some time about checks on the sovereignty of Parliament, entrenched Bills of Rights and so on. One cannot entrench anything in this Parliament. It profoundly affects the rights and freedoms of the individual. The Government have themselves had difficulty with the matter and they would welcome constructive public discussion before reaching a conclusion.

Mr. Nigel Lawson: If there were a procedure for judicial review in determination of vires, whether intro or ultra, before Royal Assent, would this not remove the problem whether there should be a judicial review after Royal Assent?

Mr. Short: That is the point of those opposed to the judicial review. If we have adequate machinery to check the vires of a Bill when it is going through the Assembly, and when it is submitted for Royal Assent, is it necessary to have a judicial review after that? In considering the third stage we are studying the advice of the Law Officers, but we would certainly be willing to look at any other proposals.
I turn to the electoral arrangements because, again, there has been some criticism. Paragraphs 32, 33 and 177 of the White Paper set out the proposed arrangements for the Scottish and Welsh Assembly constituencies. The arrangement for the first elections—that is, two Assembly Members for each parliamentary constituency—is a temporary measure designed to achieve a fair system without delaying the setting up of the Assemblies. For second and subsequent elections we propose a formula for dividing up parliamentary constituencies into Assembly constituencies. Basing the new arrangements on existing parliamentary constituencies is very convenient administratively and for the party organisations. The formula for sub-division reduces as far as possible the large disparities in size of constituency electorates which sometimes arise in Westminster elections. If hon. Members have any other formula to propose instead we would be very happy to look at it.
The Leader of the Liberal Party also raised the question of the electoral system itself. The issue is whether it could be improved by some form of proportional representation instead of the relative majority system. It would make no sense to have one system for these elections and another for local and central elections.

Mr. Thorpe: Northern Ireland?

Mr. Short: Northern Ireland is a different case altogether. Changing our national system would involve detailed

study and examination. It would be quite wrong to pre-empt such a study by proposing one of variants of proportional representation for elections to the Assemblies. It is important that the public should understand and have confidence in the Assembly elections. That can best be done by using the system which is familiar and which has commanded general support in this country for many years.
There is one further matter, which arises from the White Paper and on which I should say something. It is the question of international relations. Paragraphs 87 and 219 of the White Paper set out the Government's position on this. It has been argued, mainly by Scottish and Welsh nationalists, that the devolution settlement should give Scotland and Wales separate representation in EEC institutions.

Mr. James Dempsey (Coatbridge and Aidrie): My right hon. Friend has dealt with the question of constituencies for the Assemblies, stating that there will be two candidates per constituency. Would he refer to the question: who will be eligible to stand for election to the Assemblies? We are often asked, now that young people are entitled to vote at the age of 18, whether it is the intention to consider altering the Representation of the People Act to allow all those eligible to vote also to be considered as suitable candidates for election to the Assemblies.

Mr. Short: The Bill will set out the disqualifications for Assembly membership and they will be broadly the same as those for this place, except that peers will be allowed to stand for the Assemblies.
As I was saying, it has been argued by Scottish and Welsh nationalists that the devolution settlement should give Scotland and Wales the right to be represented directly in the Community institutions, but this would be impossible, because it is the United Kingdom as a whole which is a member of the EEC.
All other EEC countries are represented only by their central Governments, and that includes West Germany, which is a Federal Republic. Only full independent sovereign States can be represented on the Council of Ministers. This is one of the points on which the separatist


argument has been confused, to a large extent quite deliberately, with devolution It is not possible in devolution to have separate representation in Europe.

Mr. William Molloy: Is not my right hon. Friend aware that some time ago there was a dispute in Western Germany between the central Government and the North Rhine-West-phalian Land Government? It concerned a fine imposed on West Germany which the central Government in turn tried to impose on North Rhine-West-phalia. It is not quite true to say that West Germany is solely represented by the Federal Government in the EEC and that that has ruled out any conflict within West Germany.

Mr. Short: I am not talking about possible conflicts within a country, although I shall talk about a possible one in a moment. All I am saying is that it is the Federal Republic of Germany itself which is a member of the EEC and which is represented there by the Federal Government. Whatever devolution settlement we had, that would be the case with the United Kingdom. It is inevitable. We have no choice about it. It is clear that in any scheme of devolution such direct representation would not be possible. What the nationalists advocate would necessarily involve either complete independence or a complete recasting of the institutions of the EEC.

Mr. Reid: Like the Prime Minister yesterday, the Leader of the House seems to have based a number of arguments on the Kilbrandon Report. Is not the right hon. Gentleman aware that, in the changed political and social circumstances of Scotland, Lord Kilbrandon has changed his mind? If asked now what method of Government for these islands he favoured, Lord Kilbrandon would say publicly, "A relationship between Edinburgh and Brussels with London withering away". During the withering away period, would it not be possible for a sessional committee in the Scottish Assembly in Edinburgh to look after secondary legislation?

Mr. Short: I shall come to that point, but I emphasise that only the United Kingdom itself can be a member of the EEC. No devolved Administration can be. I emphasise, however, that there will

be the closest consultation between Edinburgh, Cardiff and London on all EEC matters affecting the devolved Administrations, and we hope that, in the ordinary course, it will be possible to delegate to those Administrations the task of implementing, within Scotland and Wales, Community provisions in devolved subjects. But I make it clear that it could be done here at Westminster. For example, if there were some Community provision about education, it could be handled here, but I hope that it would be delegated to Edinburgh and Cardiff.
As with other matters of common interest, the emphasis will be on consultation and co-operation, but even if they wanted to—and they do not—the Government could not shed their sole responsibility for representing the United Kingdom as a whole in all international matters.
For the first time, and at the instance of this Government, the whole subject of devolution has been taken past the stage of vague notions and mere assertions. We have provided, for the first time, a detailed and credible set of proposals in which a strong constitutional structure is matched by a detailed, carefully drawn-up, generous and considerable degree of devolution in subjects of government, on which we can concentrate and no doubt improve, as a basis for legislation.
There are those, of course, who are apprehensive about devolution and perhaps would not have it at all. [HON. MEMBERS: "Hear, hear."] Those of my hon. Friends and hon. Members opposite who are applauding that statement are not living in the world as it is. Doing nothing is no longer an option. I ask them to consider public opinion in Scotland and Wales and to judge for themselves whether sensible, workable devolution can possibly be denied. I am convinced that it cannot—and that is quite apart from its intrinsic merits, to which I and the Government are dedicated. We believe that it cannot be withheld, We have moved far beyond that stage now. If these sensible proposals are rejected now by the House, I believe that such a vote will be the death warrant of the United Kingdom.
Some people have said that our proposals go too far and will entail the breakup of the United Kingdom. Others, who also wish to avoid breaking up the United


Kingdom, have said that the proposals do not go far enough. Some cry "Too little" and others "Too much". It may therefore be that we have got the proposals about right. I do not know. As I have said, we are willing to listen and we are willing to modify them.
I believe that these proposals will assure the future of the United Kingdom. To deny them, greatly to dilute them, or, indeed, greatly to strengthen them, would, I believe, inevitably lead to the break-up of the United Kingdom. We have said repeatedly that we are determined to preserve the political and economic unity of the United Kingdom. For this reason, we have excluded from our proposals any constitutional powers or devolved powers which we think would undermine that unity. That has been the main criterion in deciding the content of the scheme.
To those who think that the Government's proposals themselves do not go far enough, I would say this. Some people have not yet grasped all the implications of the White Paper. To remedy that, however, is one of the purposes of the debate. They do not yet realise the full extent of the powers which we are proposing for Scotland and Wales. They have tended to concentrate on the reservations and on peripheral matters and to overlook the positive aspects. They may also have overlooked—dare I say it?—that there will be no devolution at all without the approval of this Parliament. Any proposals have to be embodied in an Act passed by this Parliament.
Following devolution, the day-to-day situation in Scotland will be that over nearly all domestic services the Scottish Assembly and Executive will do the job which is now being done by the United Kingdom Parliament and Government. Every Scottish measure proposed in this Session, for example, would in future be done by the Scottish Assembly. In Wales, over a similar range of services, the Welsh Assembly will have a substantial number of powers now possessed by the Secretary of State for Wales. But they will not have power to pass new Acts of Parliament.
I would ask impatient devolutionists to look at our proposals with a little more imagination and not to become obsessed with the particular features which they

do not happen to like. I ask them also please to remember that any proposals must be passed by this Parliament.
The Government now look forward to a period of discussion and consultation, and I appeal to the House not to go back over the old ground. Let us accept the need for some kind of sensible devolution now and resolve to construct a thoroughly satisfying and workable system. If we approach the debate in that spirit, it may well be the first main step of this House towards a statute in the next Session of Parliament which will be a landmark in our constitutional history and the outstanding achievement of this Parliament.

5.0 p.m.

Mr. Alick Buchanan-Smith: In one sense I think that the House may be grateful to the Lord President for describing in some depth some of the more detailed aspects of the White Paper. However, at the same time I cannot help feeling that he went through what I regard, with respect, as a rather dry and academic exercise necessitated by some circumstances which, until the closing stages of his speech, he neither described nor sought to justify.
I was disturbed by the justification which he appeared to put forward towards the end of his speech. He said that he wanted not too little and not too much and therefore, because the Government's proposals, in his view, happened to lie somewhere in the middle, perhaps they might be right. If that is the criterion by which he seeks to judge the proposals that he is laying before the House, it is probably the best recipe we could have for disaster. I believe that proposals of this nature do not lend themselves to be judged by whether they are not too little or not too much. They require to be judged by much deeper and more important criteria.
We are dealing with the constitution of the United Kingdom and with the whole framework within which we, our children and their children will have to live and work in the future. Therefore, the criterion by which I shall judge the Government's proposals and any others which are put forward will be not whether they are too little or too much but whether they are right for the better government of the United Kingdom. That


is the criterion which I hope we shall all use as our guiding principle in the way we judge either what the Government put forward or what others put forward.
Although the right hon. Gentleman was helpful in putting forward certain points and spelling out certain details, he was less than fair to my right hon. Friend the Leader of the Opposition, who I believe did a great service to the House yesterday afternoon when she spelled out the problems of vires, how they should be dealt with and how they should be provided for in respect of any future conflict. In dealing with the importance of this aspect I should like to refer to paragraph 27 of the White Paper. That paragraph illustrates that the whole question of vires and conflict will arise not only occasionally but, as paragraph 27 states,
Their use should not therefore be regarded as a last resort implying a serious confrontation.
On an everyday basis this is liable to and could arise generally. Therefore, it is right that considerable attention should be paid to this matter.
My right hon. Friend the Leader of the Opposition spoke about having some form of legal framework for deciding this matter. That is of vital importance concerning questions of legislation being intra vires or ultra vires. If we examine questions of policy I think that we enter a dangerous area because we are centralising so much on one person. As the paragraph of the White Paper which deals with this matter makes clear, there could be confusion in putting this power on the Secretary of State instead of formalising it in a way which might be better. The approach of the right hon. Member for Devon, North (Mr. Thorpe) is probably more honest in respect of this matter than the Government's approach. If we are going down the road down which the Minister has gone with his proposals, the matter is probably better dealt with through a federal type system.
The right hon. Gentleman this afternoon also dealt with what I consider a more minor point. I should like to turn to the broader principles underlying the White Paper. The right hon. Gentleman referred to the electoral arrangements. I was glad that he said that the arrangements proposed in paragraphs 32 and 33 of the White Paper are regarded to some extent as

being of a temporary nature. I represent a rural constituency in Scotland. I point out to the right hon. Gentleman that at one time weighting in favour of the rural areas was an accepted principle of our electoral system. The differences have gradually been ironed out in respect of local government. The proposals in the White Paper will have entirely the reverse effect. The weight will go entirely on to the industrial, more heavily populated areas. This White Paper would impose upon an Assembly Member representing a rural constituency a great task in terms of the representation of his constituents. Therefore, I stress that this matter requires looking at very carefully.
I should like to take a broader look at the White Paper and the proposals for devolution generally. Given the right hon. Gentleman's position as the person who has had to be the architect, to some extent, of these proposals, I criticise him and point out that I should have felt much happier if he had put forward a broader justification for what he is doing, rather than trying to deal with the details. I shall try to deal with what I believe are the broader principles which should underlie legislation and which make legislation of this nature necessary at all.
I shall start by referring to three absolutely inescapable facts which we face in Britain. These facts are not faced uniquely in Scotland or Wales. They are faced throughout the United Kingdom. First of all, it is generally accepted that we have developed in this country, because of the complexities of Government and so on, an over-centralised system of government. Going hand in hand with that system there is a feeling of remoteness from Government which is not necessarily geographic but which is felt broadly throughout the country. That is an inescapable fact and we fail to recognise it at our peril.
The second fact is that the House of Commons, in respect of the job it has to do and the work it has to carry out, is heavily and dangerously overloaded. It is fair to question whether the House of Commons is doing its job properly. I should certainly question whether in certain areas of the United Kingdom—not necessarily just areas of Scotland or Wales—we are doing our job of government as well and as efficiently as we should be doing it. I do not believe that


we are doing it as well as we should or as we are meant to be doing it or, indeed, as well as Parliament may have done it in the past.

Sir Raymond Gower: Will my non. Friend explain how these proposals will lessen in any way the work load of Members of Parliament who represent English constituencies? In my view they lessen the work load of Scottish and Welsh Members, but what do they do for English Members?

Mr. Buchanan-Smith: I am grateful to my hon. Friend for raising this matter at this stage. I shall deal with it now. After a few years as a Member of Parliament, realising the work load and so on, I genuinely hoped that many of these problems or "inescapable facts", would be overcome by Parliament through its own machinery. But this has not happened. I hope that the proposals and principles which the Government are putting forward will resolve some of these problems, at least for some parts of the United Kingdom. It is in that context that I make this point.
The third fact specifically concerns Scotland. In Scotland there has always been the feeling, which has grown in recent years—a feeling based on perfectly legitimate, fair and proper claims—of a difference from the United Kingdom. I shall mention two aspects of this matter. First, there is the simple fundamental fact that our legal system is different from that of Scotland.
Secondly, Scotland is different from the rest of the United Kingdom because, in administrative terms, a great deal of government has already been devolved to Scotland. Given this special situation, Scotland has a particular view and feeling of difference.
Having said that, I cannot emphasise too strongly that, no matter what may be said today or throughout the rest of the debate by Members of the Scottish National Party, Scotland's loyalty to the United Kingdom is absolutely clear and overrides all else.
Given these three facts—the over-centralisation of our system and the feeling of remoteness, the fact that I do not believe that the House of Commons is doing its job as well as it should, and

the feeling that there is a difference in Scotland to which particular attention must be paid—it is right for the Government, as for any serious political party to consider whether some form of devolution is applicable and can meet the test put to me a little earlier by my hon Friend the Member for Barry (Sir R. Gower). It is against this background that we must look at the whole question of devolution.
First, I turn to the question of over-centralisation and remoteness. Throughout speeches yesterday and in lip service. if not in other ways, throughout the country, it must be acknowledged that, given the greater complexity of modern Government—the size of Government Departments, the Civil Service and the range of Government responsibilities is much greater now than it was a number of years ago—there is a feeling of resentment against the complexity of government today. In Scotland, as in other areas of the United Kingdom perhaps, this feeling is exaggerated because of what happened regarding local government.
The Secretary of State for Scotland and the Prime Minister tried to put some of the blame for the reorganisation of local government on the Conservative Government. I remind them, for the sake of the record, that they did not seek to oppose that measure in the House of Commons. Therefore, if the reorganisation of local government is to be blamed for adding to the complexity and remote-less of government generally, the Labour Party has a certain amount of responsibility and blame as well. The Government do not do themselves any good by trying to duck from underneath that one.
The second broad area which gives cause for worrying to people in Scotland and elsewhere is greater centralisation in ways other than the agency of Government itself. We have seen this in recent years—particularly since the war—in two directions. First, we have witnessed the growth of statutory bodies. We have far more statutory bodies today, which are in no sense directly elected, than 20, 30 or 40 years ago. We have health boards, tourist boards, the Scottish Development Agency, the Highlands and Islands Development Board, and so on. I shall deal with this point in relation to Parliament later in my speech. The ordinary


citizen finds it very difficult to make representations to these bodies through democratic means.
The second broad area of growth outside Government concerns the nationalised industries. I find the Government's lip service towards decentralisation and the diffusion of power slightly strange when I recall that, through nationalisation, they have done more to centralise power in industry than any other Government of this country. It is this which industrially has led Scotland at least to a greater feeling of frustration than anything else. With the centralisation of the coal industry and, more recently, the steel industry, we have seen a siphoning off of much of our managerial ability from Scotland into other areas of the United Kingdom, and particularly into the vortex of London. That does not do any good for the leadership and identity of Scottish industry.
I have mentioned what happened centrally regarding the Government, nationalised industries and statutory boards. However, I should like to make the further point that we kid ourselves that this feeling of over-centralisation and remoteness is confined only to Government and quasi-Government agencies. But it is equally felt, as I indicated in relation to the nationalised industries, in industry generally. There is no doubt that since the war Scottish industry and its organisation has lost a great deal of its national identity. An increasing area of Scottish industry is now controlled by boards outside Scotland. That has meant the drawing away from Scotland of many other activities, such as research and development, which I believe must go on within industry if it is to be complete. This, again, has led to a great deal of frustration, as has been well represented and described—I do not intend to go into it further—by the Scottish Council for Development and Industry. This has built up the branch-factory/branch-office feeling throughout Scotland which not only exposes Scotland economically when the country slips into a period of recession, but does a great deal of harm to our feeling of national identity and of being able to influence events in industry.
The Government have not helped with either nationalisation or industry generally. The fact that Government Departments, particularly industrial Depart-

ments such as Energy and Industry, are so centralised has not helped to encourage industry to decentralise. In passing, I would mention that the oil divisions of the Department of Energy, for example, are still situated in London rather than in the area where oil activity is taking place. That is encouraging centralisation rather than the decentralisation and diffusion of power. This is confined not only to the Government, but to industry.
Even within Scotland we have a great deal to answer for. We have encouraged a centralisation within Scotland, particularly administratively in Edinburgh. If we really believe in decentralisation and are honest with ourselves, we must look more at what can be done to make sure that areas in Scotland benefit from all these things.
The feeling of over-centralisation and remoteness is referred to in the Kilbrandon Report, Chapter 9, paragraph 295. I do not intend to read it now, but it describes the feeling of remoteness which was expressed to the Commission.
The second point on the background to the debate concerns the overloading of the House of Commons. I believe that the House of Commons is overloaded and that it is not in the best interests of democracy and the efficient conduct and scrutiny of Government that this should be so. Again, I refer to the Kilbrandon Report. In Chapter 10, paragraph 323, the Commission's conclusions are set out. I do not intend to repeat them. They are there for anybody who wants to read them. There is obviously dissatisfaction with the way in which Parliament is working in the best interests of democracy.
Two matters worry me about Parliament generally and a third concerns Scotland. First, generally, I have served as a member of a Select Committee, which was not so much a scrutiny type of Committee as a Committee to influence policy, because we looked at Government policy rather than the conduct of Departments.
As the power of the Executive has grown, and particularly as the power of the Cabinet has grown, we in this House have to a great extent lost our ability to influence policy in its formative stages. Policy is simply endorsed in the House of Commons. The Government of the day use their parliamentary majority to get endorsement of their policies. To that


extent we still have to endorse policy, but the ability to influence it has to some extent been lost.
Secondly, apart from the Public Accounts Committee and the Expenditure Committee, our control over the Executive in the conduct of its affairs is not as effective as it should be.
I am in no doubt that Scotland is suffering and has suffered in recent years from a log jam of Scottish legislation. I make only two references. The first concerns law reform. I mention this because law reform does not necessarily mean more legislation, but the bringing up to date of existing legislation and making it better. Anyone who has served as a Minister in the Scottish Office or had any dealings with the Law Commission in Scotland knows that there is a backlog of good law reform measures waiting to be introduced, but which the Westminster Parliament does not have time to tackle.
Another good example of what I have in mind is the law on divorce. I am not debating whether we want to change the divorce law, but the fact is that we have not had time in this Parliament even to debate whether we want to make a change. I do not intend to go into the merits of the matter but not having time to debate the issue demonstrates the kind of legislative problems that face us in Scotland.

Mr. T. G. D. Galbraith: Does my hon. Friend agree that one reason why there is not time is that Scotsmen are loquacious? Is he aware that if all the legislation to do with Scotland were removed from the Floor of the House that would provide 4 per cent. more time?

Mr. Buchanan-Smith: I agree with my hon. Friend that Scots people are often loquacious, but if some of the legislation were dealt with in an Assembly in Edinburgh that loquaciousness would be exposed to criticism by the people of Scotland, and that might provide some discipline and cut down some of the loquaciousness. There are faults in the way in which we conduct our affairs, and my hon. Friend is right to draw attention to them, but if we were to conduct our affairs in an Assembly in Edinburgh what we did would be more exposed than it is now to scrutiny by the public in Scot-

land, and that might mean that we would conduct our affairs in a better way than we do now.
Because of the way in which Scottish legislation is dealt with in the House of Commons a particular burden is imposed on Scottish Members. One has only to look at the lists of Standing Committee Members to see that Scottish Members have a better Committee attendance than Members from other parts of the United Kingdom. In one sense that is not a bad thing—it shows that we play an active part in Scottish affairs—but it does mean that our time and our ability are limited when it comes to influencing the affairs of the United Kingdom and taking part in United Kingdom Committees in the way in which we ought to do if we want fully to represent the interests of our constituencies.
The third general reason why we must seriously consider these devolution proposals is the feeling of difference between Scotland and the other areas of the United Kingdom. I mention this particularly in connection with our legal system. The difference there stands by itself. I do not believe that it should stand by itself, and perhaps I might give the House the example of the measure introduced by the hon. Member for Roxburgh, Sel006Birk and Peebles (Mr. Steel) to reform the law on abortion.
Under Scottish law as it stood there was not the same need as there was in England to go through a reform of the law on abortion, yet we had to go through the procedure and to get the Bill for the United Kingdom, warts and all. We are now faced with the possibility of a reform of the abortion law, but had we in Scotland been left alone that would not have been nearly so necessary. The legal system in Scotland differs from that in England not only as a system but in the way in which it works, and I give that as one example to demonstrate what I mean.
The area in which one finds a real difference between England and Scotland is that of administrative devolution that has taken place under successive Governments, but particularly under Conservative Governments. In one sense this administrative devolution has been good and has been of benefit to the people of Scotland. Having been a Minister in


the Scottish Office and seen the Government at work both in St. Andrew's House and in Whitehall, I know that it is of benefit to the Scottish Civil Service and to the people of Scotland that the Scottish Civil Service has been moved away from the centre of London. The service is more in touch with the people whom it seeks to serve than are other organs of the Civil Service that are based in Whitehall. We have divorced the Scottish Civil Service from direct contact with and control by Scottish Members of Parliament, but by so doing we have served to emphasise the remoteness of Scottish Members and of Westminster from the real things that happen in Scotland.
It is broadly because we have this over-centralisation of Government, because we have this overloading of Parliament, with Parliament not working in the best interests of democracy, and, finally, because of this feeling of difference between Scotland and the other parts of the United Kingdom that I believe that we should have a Scottish Assembly. I believe, too, that as it is in the interests of better government and better Scottish legislation that we should have such an Assembly, that body should be given legislative powers.
It having legislative powers, I argue that it is right that the Assembly should be directly elected, as my right hon. Friend the Leader of the Opposition said yesterday at col. 239. The Conservative Party is the party of devolution and has done more than any other party to devolve administrative functions to Scotland. We should now undertake political devolution alongside administrative devolution, and that is why in the two most recent General Elections we included in our manifesto a commitment to do so.

Mr. Iain Sproat: Will my hon. Friend make it clear that in the manifesto we did not commit ourselves to a directly-elected Assembly but only to an indirectly-elected one? Will he make it clear, too, that when he speaks from the Dispatch Box today in favour of a directly-elected Assembly he is speaking for himself alone and not for the Conservative Party?

Mr. Buchanan-Smith: That is true, but I remind my hon. Friend of what was said by the Leader of our party in the House on 19th November at col. 22. I refer my hon. Friend to that statement

because it is a clear comitment to a directly-elected Assembly for Scotland, and yesterday my right hon. Friend referred to an Assembly with legislative powers.
I have a number of criticisms to make of the Government's proposals, and I should like to tell the House where our proposals differ from those of the Government and why ours are better. There are certain underlying principles of the Government's proposals with which I agree. There are certain powers that must be reserved to the United Kingdom Parliament. This is particularly so in relation to defence and foreign affairs, and in certain respects to the economy and industry. Where the organisation of these matters is on a United Kingdom basis it is right that powers relating to them should be reserved to the United Kingdom Parliament.
If one does not do that, one comes back to the Scottish National Party and goes down the separatist road. To that extent Members of the SNP are straightforward in what they say, but I say to them that it is not just a question of reserving powers to the United Kingdom Parliament. It is in the interests of Scotland that certain Dowers should be exercised on a United Kingdom basis. This is particularly so in relation to Scotland's position in the world, in relation to Scotland's defence, and in relation to the integration of Scottish industry within United Kingdom industry. If Scotland is to benefit, it is right that those matters should be dealt with on a United Kingdom basis. If we are to maintain our allegiance to, and power within, the United Kingdom, it is right that that power to deal with those issues should operate on a United Kingdom basis, and to that extent I support the proposals in the White Paper.
My reservations lie in three major directions. First, I object to the single-Chamber system. No matter what the right hon. Gentleman may have said about the revisionary powers or the fact that the Secretary of State would have to seek a resolution of Parliament, I expect that the exercise of those powers would be personified in the person of the Secretary of State of the time. It is not in the interests of good government that they should be so centralised and personalised. Nor do I think—I know


that the right hon. Member for Kilmarnock (Mr. Ross) has a broad back—that it is fair to the occupant of that office to saddle him with the kind of criticism that his exercise of those powers will inevitably attract.
This raises all the problems which my right hon. Friend mentioned yesterday and on which the Lord President admitted the White Paper was not clear—the whole problem of vires. There will have to be a proper legal framework for the reserve powers—

Mr. Edward Short: What does that mean?

Mr. Buchanan-Smith: I have said precisely what my right hon. Friend said yesterday. It comes back in part also to the federal system described by the Leader of the Liberal Party, in which a legal framework is necessary to resolve these problems. The Prime Minister himself rejected such a system yesterday as too complex and legalistic. In this single-Chamber system, the reserve powers have to be within a legal framework.

The Minister of State, Privy Council Office (Mr. Gerry Fowler): I am trying to follow this, but the hon. Gentleman never spells out what the legal framework is, other than the devolution Act. Nor does he say how this House or any other body would overrule the Assembly on policy grounds within the legal framework. What is the connection here?

Mr. Buchanan-Smith: There are two issues here. First, on the policy grounds, I have considerable reservations because they will be centralised on the person of the Secretary of State more than anyone else. Second, when it comes to Acts of the Assembly in relation to the United Kingdom Parliament, is it not better, if we go down this road, to have some form of judicial review, as in a federal system? Is that not a cleaner and more straightforward system?

Mr. Edward Short: We want to get this clear. Does the hon. Gentleman refer to judicial review of Acts which have been passed or the scrutiny of Acts in their process through the Scottish Assembly? What does he mean?

Mr. Buchanan-Smith: It is for the right hon. Gentleman, not me, to justify

his proposals. I will put forward an alternative in a moment which I believe overcomes the difficulty in which he has put himself.

Mr. Edward Short: I was asking about what the hon. Gentleman had said.

Mr. Buchanan-Smith: The second area in which I have reservations and criticisms is that of the two-tier Executive. A system of two tiers of government as we have in local government at present—in the eyes of the public that that is not working terribly well—leads to over-government and confusion for the average citizen. For that reason, with these two arms of the Executive, there is more likely to be conflict. So this two-tier system is not essential to effective devolution.
If there is to be a single Civil Service answerable to two Executives, as is possible, there will have to be two different sets of civil servants within that Civil Service to advise the Executive of the Assembly and the Executive at Westminster when they come into conflict. The same civil servants cannot advise both. Either there should be a separate service or there should be two separate sets of civil servants within a single service.

Mr. Gerry Fowler: Can the hon. Gentleman take the point that all civil servants are employed by the Crown but are in the service of a particular Department or agency and that there will be no difficulty with those employed in the service of the Scottish Assembly or Executive? They will not be responsible to two masters at one moment. They are not in any sense responsible to the Secretary of State at that time.

Mr. Buchanan-Smith: The hon. Gentleman is ducking the issue. There will be one Civil Service in name, but there will be two sets of civil servants in fact, one advising the Assembly and the other advising the Secretary of State.

Mr. Edward Short: What is wrong with that?

Mr. Buchanan-Smith: In that way, one will be multiplying the Civil Service and decreasing democracy.
The third area in which I have reservations is that of the Secretary of State's position in the United Kingdom Cabinet. Because of the reduction of his Executive


responsibilities in Scotland, there is no doubt, although he will have Governor-General type powers, that his position will be weakened in the United Kingdom. If we are to have this kind of structure, which is not federal, it is vital that not only is Scotland's voice heard in the United Kingdom Cabinet but that it is expressed by a person in a strong and authoritative position. With a two-tier split Executive, the Secretary of State will not be able to speak with the authority that he has had in the past. His powers will be weakened; that is not in Scotland's best interests.
On those three main grounds, with some minor reservations as well, I believe that it is better to have an Assembly working within the United Kingdom framework and with only one Executive. It is right for it to have legislative powers but they should not be exercised by a single Chamber. Rather than set up a second Chamber, I would use Parliament as the revising Chamber, with First Reading taken here, the main legislative work of Second Reading and Committee taken in the Assembly and Report and Third Reading taken in Parliament—again with an opportunity for the Assembly, in certain circumstances, to initiate legislation.

Mr. John P. Mackintosh: Can the hon. Gentleman explain one thing? If there is to be no Executive in the Scottish Assembly, who will take the Bills through the Assembly, defending them line by line and clause by clause? Who is to do the Government's job if there is no separate Executive?

Mr. Buchanan-Smith: Ministers can do that and can be appointed in the Assembly by the Government. That is what happens in the House of Lords. The system already works. Also, it is not unique to have an Executive separate from the legislative assembly. That happens in the United States Congress. So this is not a legislative innovation but it is a real alternative—and a better one—to the Government's proposals.
My proposal has considerable advantages over the Government's suggestions. In the first place, it ensures that we have a revising Chamber. Secondly, it also ensures that in some stage of the legislation we involve Scottish Members of Parliament at Westminster. Some hon.

Members complained yesterday that an Assembly in Scotland which dealt with all stages of Scottish legislation would mean that hon. Members from Scotland at Westminster would not have the same opportunity to comment and to take part in Scotttish legislation.
The third and most important point is that conflicts on legislation will be resolved within a parliamentary framework and not involve a clumsy veto procedure which is based on one man. This relates to the point that the right hon. Gentleman the Lord President raised. Under these proposals the relationship with Westminster would be a continuing partnership whereby difficulties as they arose would be ironed out and would not reach the kind of crisis proportions where the veto power is centred on one person, the Secretary of State.

Mr. Edward Short: If the Committee stage were taken in Scotland and the Report stage in Westminster, would not that be more fertile ground for conflict than anything I am proposing?

Mr. Buchanan-Smith: We are dealing with two elected Chambers. Many countries have two elected Chambers. There is nothing unusual or innovating in having one elected Chamber revising what another elected Chamber has done. It would be an innovation for this country but it has worked perfectly well in other countries. That is the first main advantage of our proposal.
The second advantage is that under these proposals the Assembly would be able to debate and scrutinise the whole range of areas which currently are the responsibility of the Secretary of State for Scotland and it would not be confined to those areas which are reserved to the Assembly in the White Paper. This would remove the kind of artificial divisions referred to in the White Paper.
This would also create a tremendous opportunity for scrutiny within Scotland, not only of Government activities in Scotland but also of statutory boards and other public bodies.
The third main area of advantage is that the position of the Secretary of State would be maintained and Scotland's voice in the United Kingdom Cabinet would be a real one and not one that had been weakened by the kind of split responsi-


bility which the Government proposal advances.
It is in the interests of good Government to have devolution that is political as well as administrative in character. What I have described this afternoon will achieve this for Scotland. It will mean better Government for Scotland and will be within the integrity of the United Kingdom. It does not have the over-government of the two-tier system that is proposed in the White Paper. It broadens the area of responsibility of the Assembly beyond the split functions of the White Paper and provides a much better, more effective and more realistic method of dealing with conflict, should conflict arise.
Conflict is not a new idea. It is something that is with us at present. I share with the right hon. Gentleman the Lord President his faith in the people of Scotland and I believe that given sensible measures of devolution it will be in the interests of the Scottish people to make them work.
So far in this debate there has been a lot of talk about the Union, and I hope that it will continue. I bow to no one in my belief in the integrity of the United Kingdom and of what United Kingdom membership has achieved for Scotland. Surely, as embodied in our institutions of government, our concept of the Union must not be a stagnant one. The institutions of government under the Union have changed and evolved over the years to meet new circumstances. I do not believe that further changes now necessarily threaten the Union—rather the reverse. If we are not prepared to change some of our institutions to meet a new situation, we shall put at risk the future unity of Great Britain.
It is for these reasons that the change of the kind I have described best serves the interests of Britain as a whole.

5.44 p.m.

Mr. Sydney Irving: I am pleased that the Government have provided the time and the opportunity for the fullest debate on this subject. The debate last February was dominated by Scottish and Welsh Members. Excluding Front Bench speakers, of the nearly 30 hon. Members who spoke, only six were Members for English constituencies. All the rest were from Scotland or Wales.

If this were a matter of exclusive concern to Scotland and Wales that would be entirely appropriate, but it is a matter of serious concern and consequence to England, and it is time that English Members expressed their views.
I want to put on record my basic view. To implement the present proposals as they stand would, I am convinced, be a profound mistake. At a time when we should be simplifying and rationalising government, with a view to making it more sensitive and responsive to the feelings of our people, we are adding another layer of government with more bureaucracy and at additional cost when we should be shortening the chain between decision making, implementation and the citizen.
One of the greatest problems of the modern age is that of communication. If we proceed with these proposals we add one more layer to government and make communication that much more difficult. If the proposals are implemented, we shall have at the top of the chain the European Parliament and all the other European institutions. Below, we shall have the Westminster Parliament, and then will come the Assemblies at Edinburgh and Cardiff, and then the large metropolitan counties—and trailing below will come the county councils, the district councils, the parish councils and, perhaps, in time, even the neighbourhood councils.
Is it surprising that the Government are popularly regarded as inflexible, unresponsible and out of touch? We have already created so much collar that the horse is almost in danger of collapsing and cannot function effectively. I am convinced not only that the form of devolution is inappropriate but that piecemeal development of this kind will prejudice a wider consideration of urgent matters with which we should all be concerned.
The first of these is the grand review of the way we work, which is intended to start soon. Anyone who believes that we can break out of the suffocating pressures under which we work at present without the opportunity to look at all the related and relevant institutions is mistaken. We are placing in the way of the review committee an impediment that will restrict it right from the start.
We have recently been saddled with two crippling and unsatisfactory reforms in the sphere of health and local government which pre-empt much of the ground that the review should be examining. To take a decision on devolution in advance of the review is to pre-empt one more vital area which the Committee should be free to consider.
One of the reasons for local government being under such strain at present is that local government reform predated the reform of its finances. Here we are about to embark on the possibility of a levy on rates before we have even seen the recommendations of the Layfield Committee.
The objections of English Members are not academic. These proposals will confront English Members with serious practical problems. The first of these is concerned with the number of Scottish Members who will be at Westminster. The Secretary of State for Scotland never faced this issue in the debate last February. If the number is reduced to two-thirds, as has been proposed by some hon. Members, the position of Scotland in retained matters such as defence, foreign affairs and finance, will undoubtedly be prejudiced. On the other hand, if the number is maintained at 71 it will look more and more like Stormont writ large, and I cannot believe that English Members would tolerate for long a Stormont situation in which Scottish Members voted on functions devolved to the Scottish Assembly in respect of Scotland.
No one castigated the Ulster Members of the Conservative Party more frequently and effectively than did my right hon. Friend the Prime Minister for being present and sustaining a Conservative majority here at Westminster by voting on matters concerning the rest of the United Kingdom. It is not good enough for the Secretary of State for Scotland, as he did last year, to quote the precedent of the Scottish Grand Committee. Would men and women of sufficient calibre come to Westminster if their powers were emasculated?
I disagree with the document's view that it is not necessary to deal uniformly with different parts of the United Kingdom. It is necessary for justice to be seen to be done, and while slavish

uniformity would certainly be unwise, the balance has been tipped violently against the rest of the United Kingdom.
The only way that we can escape from the dilemma set by the difficulties of representation is to deal in a similar fashion with England or the English regions, although I should prefer the devolution to be to local government than to have separately established new instruments of government. Otherwise, the most likely outcome of these proposals will be the development of an English nationalism, which will be brought into existence to resist the demands of the Scottish and the Welsh and which will put even greater strain on the Union. I am convinced that there will be resistance to the Bill when it is introduced, until the Government make more progress than is suggested so far in deciding the provisions for the rest of the United Kingdom.
Many Scots clearly expect to judge the success of devolution by the amount of additional money that will be forthcoming. This can be only at the expense of the rest of the United Kingdom. Already, as my right hon. Friend the Member for Anglesey (Mr. Hughes) mentioned in the debate last year, public expenditure in Scotland in 1972–73 was £2,900 million, while the revenue was only £2,100 million. Therefore, in that year, the rest of the United Kingdom was subsidising a deficit of £800 million. I do not believe that anyone in the rest of the United Kingdom objects to this at all, but what would be resisted would be that deficit financing having to be done as a result of pressure put on this House by the Chamber in Edinburgh.
In any case, I believe that the White Paper introduces a dangerous principle. The new Assembly will be spending a substantial sum of money—about £2,000 million—without having any responsibility for raising it. I am talking about the block grant. But there are other consequences of the present proposal. It means an end to about 100 years of striving for uniform standards throughout the United Kingdom. It means a different approach to the grant formula process, which is designed to be fair to all. How can we continue the complicated grant formula process when the distribution between the authorities will be left to the Assembly and will probably take


place on an entirely different basis? The process must restrict local authorities, as at present the negotiations are directly undertaken between central Government and the local authority associations in every part of the country.
If I were satisfied that these proposals were sound, I should believe, nevertheless, that we were implementing them for the wrong reasons. We started by attempting to outbid the nationalists. The idea that we can win such a contest is ludicrous. Our Scottish friends tell me, however, that some progress is now essential, as a withdrawal from the commitment that the Labour Party gave in its manifesto of last year, or the year before that, would lead to electoral disaster. Such a conclusion rests on not very substantial evidence—an odd by-election and some opinion polls.

Mr. Mackintosh: In a number of polls the figures indicate that 60 per cent. of Scottish electors want a more devolved type of government in Scotland, and that only 20 per cent. want independence and only 20 per cent. want the status quo.

Mr. Irving: I was about to say, in connection with odd by-elections and opinion polls, that taking a long view, no party should be more wary or sceptical about these things than the Labour Party.
I believe that we are about to make a fundamental mistake. The thing that wins elections is in my view firm and effective Government. If we have made a mistake, the right thing to do is to go back and ask for more time to think out the matter more carefully. I believe that the consequences of proceeding are more dangerous than the consequences of delaying.
Before we embark on a major constitutional change of such an unpredictable kind, we ought at least to have a referendum. Could the nationalists complain about the people of Scotland and Wales and, indeed, the English, being consulted in this direct fashion? It would mean that if the proposals went forward they would have solid electoral backing and, above all, the limits of devolution would be clearly established, and it would make much more difficult the likely pressure on the part of nationalists for separation and independence.
No one reading last year's debate or listening to the debate this week can have any doubt that the nationalists see whatever is implemented as a step in their advance towards separatism and independence. Indeed, last year the Leader of Plaid Cymru, the hon. Member for Carmarthen (Mr. Evans) said
My regrets about this are somewhat tempered by the thought that this kind of ineffective arrangement will prove very temporary indeed, because it will precipitate Welsh disillusion with the English political parties, and that will be to the advantage of Plaid Cymru."—[Official Report, 3rd February 1975; Vol. 885, c. 1010.]
Even my hon. Friend the Member for South Ayrshire (Mr. Sillars) talked last year about direct nation State EEC membership for Scotland. This is the way in which the arrow is pointing for the future.
The document insists that sovereignty will stay with the Parliament at Westminster. It is one thing to establish a constitutional position; it is entirely another thing to operate it against an elected majority, perhaps even backed by the regional Members of the Westminster Parliament. This would be especially difficult if the majority in the two places were from opposed parties. The regions could hardly lose. If Westminster stood firm it would be dubbed as intransigent and insensitive. If it gave way it would be threatening the Union.
I prefer to believe, like the Kilbrandon Report, that the regions, whichever they are, are concerned with the success of government rather than with where it comes from. I think that the hon. Member for Oswestry (Mr. Biffen) had it right last year when he said, on 3rd February, that we suffered from an increasing disillusionment with the institutions of authority. He said that it was due to the pervasive sense of failure because of our slow retreat from Empire without any satisfactory substitute to engage the sense of patriotism or achievement of our people.
I believe that that phase is passing and that we shall regain a sense of purpose and then regret the steps we are taking now. We shall not regain a sense of purpose by creating more government; nor shall we do it by confusing nationhood with Statehood.
In conclusion, I hope that the Government will consider giving more attention to proposals for the rest of the United Kingdom. Secondly, I hope that they will consider holding a referendum, so that this advance will be clearly based on an understanding of what our people want—both its extent and its limits. Thirdly, I hope that the Government will not advance in a piecemeal fashion in making constitutional or procedural changes. Finally, for their own safety, I hope that the Government will not introduce a devolution Bill until they are satisfied that they have the support to sustain it not only for its Second Reading but throughout all its stages. It would be bad for the Government and certainly for Parliament to have a repetition of what happened on the Parliament (No. 2) Bill.

6.0 p.m.

Mr. Charles Morrison: The right hon. Member for Dartford (Mr. Irving) began his speech by saying that the debate concerned matters that were not exclusive to Scotland and Wales. He also said that it would be a profound mistake if the proposals in the White Paper were implemented as they are. I agree with him on both counts. Indeed, I agree with most of the things he said, particularly with his comments in respect of the tiers and types of government. There is already too much government coming in too many different forms so we must be careful about adding still further to the total.
It is a coincidence, which emphasises the total integration of the United Kingdom, that the first Member to speak from the Conservative Back Benches yesterday was of Scottish origin, although representing an English seat. The same is largely true of myself today. My hon. and learned Friend the Member for Solihull (Mr. Grieve) said yesterday:
I approach the whole problem of devolution with a profound emotional reaction against it."—[Official Report, 13th January 1976; Vol. 903, c. 277.]
I do not think I have a profound emotional reaction against devolution but I am very sceptical about it.
I was glad to hear my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) emphasise the need for continuing unity in the United Kingdom. That I strongly endorse—not for emotional or quixotic reasons but

because I am convinced that the Kilbrandon Report was right to suggest that
The United Kingdom has been greater than the sum of its constituent parts.
That means greater, not in the sense of power in the world, although that is true, nor in any abstract sense, but greater in terms of advantage to people, particularly those away from the main centres of population. I thought that my right hon. Friend the Leader of the Opposition was absolutely right yesterday to stress the achievements of these islands within the United Kingdom. Therefore, anything that may lead to the erosion of the unity of the United Kingdom, either in the near or distant future, must be opposed. That is my personal view and it is the approach that I bring to bear when considering devolution.
I wonder whether devolution is now being considered as the latest recruit in the list of panaceas for our nation's ills. As a nation we have systematically blamed everything for our national misfortunes. We have blamed political parties, Governments, managements, trade unions, youth, the weather, the permissive society and foreigners—particularly foreign bankers. There is not much left to blame now, except the constitution and ourselves. Perhaps we might do better to concentrate on the latter before worrying too much about the former.
I said that I was sceptical about devolution in this context, but before proceeding further I should like to make three points clear. First, I am in favour of the maximum distribution of power. Whitehall has gathered in far too much statutory power, for which Parliament must take the blame. But in addition, Whitehall has been allowed to get away with far too much government by "con" trick. The most obvious example of this is the distribution of circulars to local authorities and to other statutory bodies—circulars for which there is no statutory backing but which are treated as though there were. The people who must take the blame for the success of the "con" trick are those at the receiving end, who kow-tow only too often in a way that must make the Whitehall ego swell daily to even greater proportions. To be fair to them, however, nowadays there is so much legislation that it is a major effort to distinguish between law and diktat. Having said that, I must point out that


many of the people who cry loudest for more local discretion of one sort and another are the same people who come shouting to Government when something seems to be going wrong.
Secondly, we are debating this White Paper on devolution in Scotland and Wales, but the position of England cannot be left unconsidered. So far as England is concerned, I am opposed to regionalism. I used to favour it when over-influenced by immature and youthful theorism, but apart from the lack of any demand for it I am now satisfied that it is simply not possible to create multi-purpose regions that make sense socially, economically, politically and geographically within the confines of such a small country as England. If that were not so, there is the strongest likelihood that all the various regional authorities already in existence—economic, water, health, and others—would have boundaries which are conterminous. The fact is that they are not.
Furthermore, regions in England would merely create yet another bureaucracy with which the private citizen would have to battle and, incidentally, would detract from the power and discretion of local government, as, indeed, some of the statutory regional authorities, such as health and water, have already done. It would be far more sensible to give local government more power and discretion rather than to reduce it.
Thirdly, I believe that so far as possible this House should try to provide people with what they want. I do not think that by any stretch of the imagination it can be said always to do so. Indeed, some hon. Members seem to set out to see that people get what they do not want. Judging by what was said in the debate yesterday, there is at least some doubt that the Welsh want an Assembly, or feel uncertain to the extent that it would be wholly wrong to force one on them at least for the present. However, if ultimately the Scots are determined to have an Assembly, they must have it—but not in the form proposed in the White Paper because that will only cause conflict and confrontation in a variety of ways that have already been described by a number of hon. Members. Nor can there be an Assembly in Scotland

until the adverse consequences resulting now, and certainly in the next 10 or 15 years, have been considered and fully appreciated.
But even before doing that, it is worth recalling paragraph 117 of the Douglas-Home Report on Scotland's government. That paragraph states:
It has been made very clear to us during our inquiry that the existing extent of devolution to Scotland is imperfectly understood. Such devolution is in fact very extensive.
It is also worth mentioning paragraph 247 of that Report which states that
It is all too evident that the Scottish people in general do not know nearly enough about how their affairs are conducted.
Granted that those paragraphs were written in 1970, but I would hazard a guess that they are broadly as true now as they were then.
What has been done to inform the Scots:
of the existing extent of devolution
or of the way
their affairs are conducted"?
Precious little, I suspect. How often is London blamed for a bad decision by a bad Scottish Secretary of State, or by St. Andrew's House? On many occasions, I suspect. Often this is done by the Scottish National Party, because it has undoubtedly been in its interests to foster the belief that London controls all and is to blame for all. Yet the reality is that in one form or another, whether or not we like it, the substance of devolution for Scotland exists to a great extent now—certainly to an extent that might make areas of England green with envy.
As I implied earlier, that extent is as yet nowhere near enough. We are now debating fundamentally not so much the substance as the shadow of devolution. It is a shadow that, in the fullness of time, could have the direst of consequences for Scotland in terms of increased costs and decreased benefits. It seems that there is a belief in Scotland that devolution, coupled with an Assembly, can produce a whole host of new benefits, while the advantages currently existing of membership of the United Kingdom continue to be enjoyed. I do not think that that would be so for long.
I want Scotland to retain her 71 West-minister Members of Parliament, but it is stretching the imagination to breaking


point to assume that the English will continue to find that acceptable for more than a few years if the White Paper proposals, let alone any improvement in terms of increased powers, become law.
I want Scotland to continue to benefit from United Kingdom regional development policies, but if Scotland takes too much unto herself it is highly unlikely that the English, particularly in the regrettably traditional areas of high unemployment, such as the North-East Coast or, perhaps, Merseyside—or even in some of the newer areas of growing unemployment—will stand for unequal treatment for Scotland if Scotland seems to be getting unfair benefits or advantages of another sort.
Least of all will the English taxpayer, in spite of his or her generosity, willingly continue, for long, to subsidise economic development in Scotland at the expense of England when the extent of extra public expenditure per head in Scotland is known and appreciated and when not only have earnings in Scotland caught up with those in England, as is the case, but as I hope they will, they continue to remain at the same level.
The hon. Member for Dundee, East (Mr. Wilson) interrupted my right hon. Friend the Leader of the Opposition yesterday and asked:
Why then is Scotland going down?"—[Official Report, 13th January 1976; Vol. 903, c. 232.]
Perhaps it is not for me to comment, but on the evidence it seems that, far from going down, Scotland is, relatively, coming up.

Mr. Gordon Wilson: I was referring to the Conservative Party, not to Scotland. I know that that is what is said in Hansard, but it is not what I said.

Mr. Morrison: I hear what the hon. Gentleman says. I cannot remember his precise words but I have re-read them and there is no reference whatever to the Conservative Party. In any case, whatever he was saying, it would seem that far from going down Scotland is beginning to come up, perhaps as a result of the oil but also as a consequence of the development of oil and of industry with British money.
North Sea oil will not be a universal provider, as members of the Scottish National Party assume, because it is finite. It is expensive and in any case it is British, and not solely Scottish. I believe it has been suggested that if the sort of partition that the Scottish National Party wants was introduced, at the worst the oil would be divided on a 50–50 basis and at the best Scotland would get a great deal more than half. Members of the Scottish National Party might care to recall, as an example, that when India and Pakistan were partitioned the available assets of the "old India" were divided proportionately according to the size of the populations of the new countries and not on a 50–50 basis. There is no reason to assume that there would be a different division of the existing assets if England was separated from Scotland.
It is all very well talking about a Scottish Assembly to run Scotland, but it is a fact that four-fifths of the population of Scotland lives in the central belt. Does the one-fifth that does not live there want to be governed from that part of Scotland? If the adverse reaction in Argyll when it was made a part of Strathclyde is anything to go by, the answer is a resounding "No".

Mr. Donald Stewart: Is that why Argyll elected an SNP Member, as did the Western Isles?

Mr. Morrison: There may be qualifications to be made. Nevertheless the answer from Argyll was "No". That apart, the cost of an Assembly would be considerable and would grow. That cost would certainly come out of money which could otherwise be used in ways more directly to benefit the Scottish people.
What should be done? First, many more powers and discretions should be given to the reorganised Scottish local or regional authorities. The hon. Member for West Lothian (Mr. Dalyell) pointed out yesterday that regional councils were unpopular at present. Who would I be to disagree with him? There is no particular reason to assume that that unpopularity will continue, particularly if those authorities are given new powers and discretions. What is more, if they were that would bring power closer to the people in a way which would not


be the case it power was centralised in Edinburgh.
Second, this House should throw out any centralising legislation. The fact that this year it is faced with a major nationalisation Bill—a centralising Bill if ever there was one, and, for that matter, a Bill to reduce local government discretion in England by forcing comprehensive education upon local authorities—gives the lie to the belief that the Labour Party has any faith in devolution or the distribution of power.
Third, the adverse consequences of setting forth along the path of devolution as foreseen not only by this White Paper but by many individuals, or as might result from the establishment of any form of an Assembly—which could lead to separation not now but at some time in the future—must be impressed on the Scottish people. I mean no disrespect to anyone, but it strikes me that the Assembly and the White Paper devolution bandwagon has been treated as though it were unstoppable. It may be, but the fact that it could turn out to be a shaky vehicle, capable of falling apart and harming all of the passengers seems to have gone by default.
Nationalist romanticism is all very well, but the full consequences, as seen in the cold, harsh light of an unfriendly new dawn, must be understood. Only after these things have been done should the job of an Assembly be considered—if it is still wanted.

6.19 p.m.

Mr. James Sillars: Before I deal with the main issues I would say that I do not necessarily regard Scotland and Wales as presenting exactly the same problems to this House or calling for exactly the same solutions. I register that point of view for my friends in Plaid Cymru.
I am always struck by the way in which we in this House turn over and sometimes trip over the boulders of devolution while the mountain of sovereignty involved with the EEC was moved with considerable ease and speed. I regard it as more difficult to transfer sovereignty from the United Kingdom to the European Community than to devolve powers within the context of the United Kingdom, and I am always remarkably impressed by the different attitudes on

these subjects. The point is that, if there is the conviction and the political will, mountains can be moved; but so, too, can boulders.
I shall deal with three main questions—the economic powers or lack of them in the devolution package presented by the Government; the question, which has already been raised in the debate, whether it is wisdom or folly to change the constitutional relationship between the peoples and nations inside the United Kingdom; and the need for this House and the Government to acknowledge the political realities in Scotland.
The Government claim it is impracticable to devolve economic management because that would wreck the integrity of the economic unity of the United Kingdom. That is absolute nonsense. No threat is posed to taking what the economists call macro decisions—the allocation of resources by volume and spending heads—and then the application of policy at micro or sub-macro level in accordance with the needs and special circumstances of different areas as determined by the people within those areas. This approach to economic management will lead to a far more effective use of our scarce resources and enable the Scottish Assembly to make a positive contribution to overcoming the internal economic and social problems we face in our part of the United Kingdom.
Given the nature of the economic malaise throughout the United Kingdom, the old attitudes of carrot and stick and regional policies, with the direction of industry out of certain areas are not options open to us any longer. We should think of resource management as well as demand management in various areas and economic devolution would assist us along that course.
I am not alone in expressing the view that executive devolution in the economic sphere is no threat to the integrity of the United Kingdom. The Labour Party National Executive Committee spoke with some authority and certitude along the same lines in the autumn of 1974. There was an interesting exchange yesterday between the Prime Minister and my hon. Friend the Member for Penistone (Mr. Mendelson) in which my right hon Friend said:
My hon. Friend must have forgotten the document that was issued with the authority


of the National Executive Committee about a month before the election of October 1974. That document exactly represented the view put forward in the White Paper."—[Official Report, 13th January 1976; Vol. 903 c. 225.]
It is not clear from that exchange which White Paper the Prime Minister was referring to—the White Paper published before the election or the one before us now. The NEC document entitled "Bringing power back to the people. A statement of Labour Party policy." said:
The Scottish and Welsh Assemblies will therefore participate in the decisions of how best to promote their development, for instance by drawing up their own economic plans along the lines set out in 'Labour's Programme 1973'. Substantial executive powers in the trade and industry fields will be transferred from central government, to enable the Assemblies to make decisions in the light of their own needs in the promotion of employment and industrial regeneration. It would also be appropriate for the proposed Development Agencies to become responsible to the Assemblies.

Mr. Eric S. Heffer: Is my hon. Friend aware that this document was issued by the Home Policy Committee of the Labour Party? It was endorsed only as a minute that came before the National Executive. I am sure my hon. Friend is aware that it was never discussed or endorsed by the annual conference of the Labour Party. The last time devolution was discussed at an annual conference—and it is the conference which commits us all in every part of the United Kingdom—was in 1968, and no decision was taken then. The matter was remitted to the National Executive.

Mr. Sillars: I have a great personal regard and liking for my hon. Friend, and it will probably remain, irrespective of our points of view on this and other issues. However, I chose my words very carefully. I referred to the Labour Party's National Executive Committee and said that I was not alone in the view I was expressing. This was the view of the NEC at that time. I have Press cuttings in my files saying that the document was put out by the NEC as a statement of Labour Party policy. I was merely pointing out that I was not alone in taking that point of view on the validity of economic devolution. By no stretch of the imagination, even taking into account the Prime Minister's wonderful dexterity in the use of words, could one say that the NEC document corresponds with

either the White Paper before the election or the one we are debating now.

Mr. Gwynfor Evans: Is the hon. Member aware that the policy of the NEC was adopted almost word for word by the Wales TUC?

Mr. Sillars: I am not being drawn into Welsh affairs. I am told I am in enough trouble over problems concerning Scottish affairs.
The real reason for the claim of impracticability by the Prime Minister and the Leader of the House who, as Leader and Deputy Leader of the Labour Party are members of the NEC and must have known that the committee's statement would have been issued to the Press, is not the economic problems associated with economic devolution. The reason is that the Government cannot get any greater devolution measure than is proposed in the White Paper through the Parliamentary Labour Party. That has become evident from the speeches made in the House in February last year and from the tone of the speeches made so far in this debate. The writing of that message appeared on the wall last year, and from that time the Government retreated from the NEC-type posture on devolution and now pretend that problems exist when they do not exist, in order to cover up the problems which do exist in the Parliamentary Labour Party.
There are two reasons and attitudes of mind for resistance from within the Labour Party. One is the fear, put forward by many of my hon. Friends from the North-East, that Scotland will steal a march on the rest and get more than its fair share of resources, and, in a sense, disable the efforts of other regions aimed towards recovery. Constant comparisons will be made between Scotland and the regions of England.
I can assure my hon. Friends that devolution is not sought in order to disadvantage any other area of the United Kingdom, but to get a better use of resources and to release fully whatever potential exists for change and self-recovery in the social and economic polity that is Scotland. In continuing to deny economic devolution, this House and the Labour Party must face a political reality. I am speaking to an audience of politicians, and, whatever theory and logic may say, political reality is a fact


we must all take into account. The political reality is that in comparing Scotland and, for example, the North-East in every respect, people are not comparing like with like in every respect. A region is limited in its political expression of grievance, but a nation, as has been shown in Scotland, has a wider freedom of action, and this is a political reality that must register in this House.
The second point of resistance springs from the view expressed by my hon. Friend the Member for Bedwellty (Mr. Kinnock) in his speech yesterday, which we would all agree, irrespective of our point of view, was a brilliant exposition of the democratic centralist case. He described himself as a differentist, but essentially in his ideas one would need centralist decisions before the differences my hon. Friend mentioned could come about. The problem with centralists is that they appear to see only conflict, friction, division, heat and anger in diversity. Many believe that when people share a common need for decent housing, full employment, industrial democracy, peace, and as much control as possible over their own lives, the only way of securing them is within a centralist structure. I do not agree. I see strength in diversity, in people doing their own thing within a broad framework, in a new partnership based on tolerance, mutual respect, shared decisions in spheres of overall concern, and confidence in the integrity of the other's intentions. If, after nearly 270 years of Union, there are in this House people who would discount the social cement of friendship and long association that exists between Scotland and the United Kingdom, that Union must count for nothing now.
That brings me to the second point, whether it is wisdom or folly to change the constitution. The unionists believe that it is folly to change it in any way that involves power and authority being transferred from here to another body. They back this judgment with the "slippery slope" proposition, that to give an inch will lead to giving a mile—and I think that I carry my constituent the hon. Member for Glasgow, Hillhead (Mr. Galbraith) with me on that interpretation.

Mr. Galbraith: Mr. Galbraith indicated assent.

Mr. Sillars: He is an honest Unionist and I think he would agree with that

interpretation, that any loosening of central authority will lead automatically to the road to separation. I think I fairly sum up the views of my constituent, who does not vote for me—

Mr. Michael McGuire: How does my hon. Friend know?

Mr. Sillars: He has told me—a number of times.
Those who think in these terms betray a lack of basic confidence in the validity of the United Kingdom. Deep down they believe, and they are haunted by this belief, that even after 270 years of living, working and dying together—because Scotsmen, Englishmen, Ulstermen and Welshmen have died together during the 270 years of this Union, sometimes in pursuit of ignoble causes and sometimes in the pursuit of very noble causes—relations between the Scots and the rest are so shallow and tenuous that relaxation of control from Westminster, a diminution of the Westminster dimension, and the emergence of a more distinctive and definite Scottish dimension will spell the end of the Union. That is the nightmare that haunts the unionist.
It seems to me that the hard-line unionists, and some others who could not fairly be put in that category, although they hold serious doubts about this constitutional change, harbour a deep fear that the Scots have no basic loyalty to the concept of the United Kingdom and, therefore, dare not contemplate change which puts their fear to the test. I believe that lack of self-confidence is unfounded. Differences exist between Scotland and the rest of the United Kingdom, and they will continue to exist, but there should be no under-estimation of the unifying influence of our intimate financial, economic, political and social links with other parts of the United Kingdom over the last two and a half centuries.
The only things which can erode and finally destroy those links are continuing insensitivity, and a continuing unyielding posture with a lack of political imagination, and action based thereon, by this House and the parties which form its major membership. With the loss of Empire, the change in the pattern of Government in the home unit—or, to use the rather unhappy phrase used by my right hon. Friend the Prime Minister yesterday, the Imperial Parliament—is


historically inevitable. With the introduction of the European dimension the old United Kingdom is no more. This is part of a process whereby it is desirable that the institutions of Europe, and how we order the affairs of our various democracies, should fit an entirely new situation, perhaps calling for a number of new solutions as the European Community evolves its democratic institutions.
I emphasise that I am not advocating that the United Kingdom should blow up and disappear from the political map. I am arguing that it is time for a sensible, well-constructed and imaginative change which takes account not only of the present but of the future possibilities. I am arguing that the best answer to separatism is to demonstrate that the United Kingdom is so certain of its basic cohesion, and so self-confident about the mutual friendship and abiding loyalty of its people, that it is unafraid of change and adaptation. I am arguing that a United Kingdom Parliament which has the generosity and vision to initiate meaningful devolution, especially in the economic field, will retain and deepen, not lose, the loyalty of the Scottish people, and thus guarantee that any future change is conducted with mature judgment and proper regard for the needs of all.

Mr. Norman Buchan: My hon. Friend is on a vitally important point. Is he saying that he no longer believes in what he has been arguing for this last month—that is, independence and not separation? He has argued against separation always, and he has argued for separate Scottish representation, as of right, at the Council of Ministers with Scotland as an independent State. I have disagreed with little he has said so far tonight, but I have disagreed with everything he has been saying in the last month.

Mr. Sillars: My hon. Friend must understand the argument about the Common Market in the context of a continually evolving situation. No one can forecast with certainty how the EEC will evolve. If there is to be, for example, a federal United States of Europe there should be a Scottish State. That is not a separatist or a full-blown independence argument. No one knows exactly what the powers of the federal States of a

United States of Europe would be. These arguments are still to come. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan), more than I, has contributed to the arguments in the debate on the future government of Scotland. All I have been trying to do is to stimulate the argument in the direction of where Scotland should fit in inside the EEC. I do not see the concepts of separatism and independence in exactly the same terms as my hon. Friend. To me there is a real difference between us based upon the definition of terms, and, no doubt, when the devolution Bill is produced and amendments are tabled we shall continue this extremely interesting argument.
May I turn to the last of the three issues, the need to acknowledge the political realities of Scotland? I believe that a profound and permanent change has taken place in Scottish political attitudes, and that meaningful self-government will loom larger and larger in the minds of the people as time passes. That is a perfectly legitimate desire, and the House should respond to it. I acknowledge immediately that this is a question of political judgment. If I am wrong, this whole devolution episode will attract nothing more than a footnote when someone comes to write about the eccentric issues which sometimes divert Parliament in the course of its more important business, and Parliament will continue on its majestic way. However, if those who think like me are right, and if our advice is basically ignored, the desire for change will not go away but will intensify.
I draw an analogy with the situation which brought the Labour Government to power and helped to depose the former Prime Minister, the right hon. Member for Sidcup (Mr. Heath). We are faced here with a situation which resembles an industrial dispute. If there is a sense of grievance and a need for change there comes a point in any dispute in which it is sensible to provide a solution. If the parties engaged miss that point the dispute develops and that which was on offer yesterday is not enough for today. If they miss the point again, what is on offer the next day will not be enough for the day after that. Attitudes harden; moderates are turned into militants and militants into super-militants. Unless we are careful, in the devolution situation we


shall turn minimalists into maximalists and maximalists into super-maximalists and super-maximalists into separatists. It will not be the SNP which creates separatism for Scotland: it will be the insensitivity of this House. The SNP is not the cause of discontent: it is only a manifestation. It is the effect, not cause. That is the point to be grasped.
If those who think as I do are right and we are ignored, and if the Scottish people are rebuffed time after time, the United Kingdom and this House will face a period of constitutional travail and entanglement in constitutional matters which will make it all the more difficult to address ourselves to the other major issues affecting the present observable slide into political and economic decline. My fear is that we shall be ignored. Last year the debate demonstrated a latent hostility to the very idea of devolution, and that hostility has not substantially diminished.
The question in my mind is how the Government and the House—because this involves all parties—which do not believe in their heart of hearts in the principle of meaningful change can legislate for that change. The test will come in the autumn and winter period of 1976–77 when the Bill comes before us. The real test will be not the Second Reading debate, although that will be a major obstacle, but the guillotine without which the Bill will not become an Act. If Parliament does not pass a measure of substantial self-government a heavy political price will be paid in the elections in Scotland because the people will be left with no choice but to reject the proposals of those whose approach is too timid or too unyielding.
There is a dynamic demand for change in Scotland, a growing desire to write a new verse to an auld sang. There is no chance of the people allowing themselves to be thwarted. This House can do it in the easy constitutional way, or it can set the scene for its immediate successor to tackle a much more acute and trying situation. In effect it can opt to do it in a hard constitutional way.
That is the choice before the House this year and next year. If Parliament acts negatively or grudgingly we shall sow seeds of an unfortunate harvest and will have to reap a democratically ex-

pressed Scottish fury. What is called for is a response to Scottish aspirations which is founded upon generosity, trust, vision and understanding. If we act in that way we shall create not conditions for disunity and disharmony, but the foundation of a new era of friendship, co-operation, partnership, a unity of purpose and joint effort. That is the prize for all the United Kingdom of meaningful self-government through the medium of devolution. We are fast approaching the "last chance" stage for the House, and I hope that we have enough sense and gumption to seize the chance, and not spurn it.

6.42 p.m.

Mr. Gordon Wilson: It is significant that from the Labour benches the hon. Member for South Ayrshire (Mr. Sillars) declared in no uncertain terms what has been happening in Scotland. It is significant that the hon. Gentleman has changed his attitude from support for unionism and a solution central to the United Kingdom which would help Scotland to support for the strength that will come from self-government for Scotland. The lesson that the hon. Gentleman has demonstrated is the reality of what is happening in Scotland.
I have listened fairly constantly to the debate during the last day and a half, and it seems to me that insufficient notice has been taken of these changes in attitude. There is a generation in Scotland whose primary loyalty is to Scotland rather than to Britain. One can see from public opinion polls how viewpoints vary with age. The number of people who stick to the old-established idea of Britain's being a power in the world, worth supporting and worth fighting for, is diminishing. Those who think that by ordaining, in this debate or in legislation, that there shall be no Scottish Assembly with real power fail to remember that there is a constituency listening to the debate—the constituency of Scotland.
The Scottish people are looking at the issue of devolution and self-government with eyes which are completely different from those of the people in other parts of the United Kingdom. The Scottish newspapers gave an entirely different reception to the White Paper from that given to it by the London Press. The


newspapers that circulate in Scotland are influential. They see changes coming. The United Kingdom no longer means what it once meant. It is now a State that has been declining for many years. For many people born in the past 20 or 25 years the great tests of unionism have long since gone. They see a country that has descended from being a great Power into one of the first rank and now of the second rank.

Mr. Robert Hughes: Is the hon. Gentleman lamenting the passing of Britain's imperial past?

Mr. Wilson: I have never lamented the passing of an imperial age, but to certain people that past had an attraction that has now gone. The economy of the United Kingdom is no longer delivering the goods that people have come to expect. It suffers from industrial decline and decay. The Scottish people have reached the end of their tether.
Anyone who thinks that we are considering a legalistic answer to a constitutional settlement is wrong. Anyone raising the question of devolution from door to door in Scotland would receive an answer related to economic prospects—a job, a better job, job security, better housing. The hope would be expressed that the actions of an independent Government or a Scottish Assembly would provide a way of dealing with the problems that have beset people for so long that they have given up hope of any answer from the House of Commons.
The question is whether the citizens of the United Kingdom will heed what is happening. Many hon. Members have quoted opinions expressed by people outside Scotland. If presented to the Scottish people those quotations could alienate support for this House and what it intends to do. There is an understanding that comes with knowledge, an understanding that comes from just being in Scotland and feeling the vibrations arising from changes in attitude.
The House will be making a serious mistake unless it decides to upgrade the White Paper and the Bill to include the economic powers that the people of Scotland want. I am the first to admit that the idea of a decentralised economy is novel. Those who are against it out of habit may have to reconsider their posi-

tion. The United Kingdom economy is almost out of control. In the course of one year the Treasury has been unable to account properly for several thousand million pounds of public expenditure. The procedures of the House are insufficient to safeguard and control public expenditure.

The Under-Secretary of State for Scotland (Mr. Harry Ewing): The hon. Gentleman began by referring to the change in attitude of my hon. Friend the Member for South Ayrshire (Mr. Sillars). Will he turn his mind to the change of attitude within the SNP? Will he tell the House whether it is still the view of the Scottish National Party, as revealed in May last year at the party's conference in Perth, by a study group under the chairmanship of his hon. Friend the Member for Perth and East Perthshire (Mr. Crawford), that the economy of Scotland and England was so interrelated that it was impossible to unscramble it in the way desired by the Scottish National Party? Will the hon. Gentleman explain whether that is still the position in the SNP, or whether he, too, has changed his mind about that particular aspect?

Mr. Wilson: No. I think that in political terms, of course, it is right for the Under-Secretary to raise questions of that sort. There was a Press report. The particular so-called document did not come before the conference at all, and has not been considered by the party, because it did not exist in the way in which the hon. Gentleman has described.
It has always been the SNP's case—my hon. Friend agrees with me completely in this—that it is possible to have an economy for Scotland which can be run according to the ways in which we in Scotland want it to be run. The hon. Gentleman is referring to a report that did not exist as he described it. It was mainly a report in a newspaper.

Mr. Douglas Crawford: The document mentioned in the newspapers at the time of our annual conference in May suggested than an independent Scotland would have a strong Scottish pound, which would be very much stronger than the English pound. If that does not argue for differences between the Scottish and English economy, I do not know what does.

Mr. Wilson: This is a very interesting debate and I should have liked to be able to pursue the question at great length, but, being very conscious of the passage of time, I wish to continue my speech.
My next point follows very naturally what was said earlier by the hon. Member for South Ayrshire. It is that instead of a master and servant relationship, which we have had before—with Scotland being dwarfed in this House and outnumbered by nine to one in population—we want to have proper harmony within these islands and a partnership with a new basis, which we would all try to make effective.
Unless this opportunity is taken to bring about a new relationship, we shall never be able to sort out the grievances which Scotland rightly and justly has. We in the Scottish National Party have said right from the outset that the responsibility for solving the problems for Scotland should rest upon ourselves and that we should accept the blame if we make mistakes. We should do what we can within our own country. If the power of decision-making is taken away from an area, its opportunities for self-development are correspondingly limited. That is why we in Scotland are looking for new responsibilities and for the opportunity to exercise them.
We are beginning to look beyond these islands for examples. We are concerned not merely with what has happened in England; we are now beginning to look to the Scandinavian countries and to other countries in Europe. We are impressed by the low unemployment rates in some of these countries. In July 1975 6 per cent. of the people in Scotland were unemployed. In Norway the figure was 0·9 per cent.; in Sweden, 1·2 per cent.; in Finland, 2 per cent.; and in Austria, 1·3 per cent. We want to have the opportunity so to arrange our affairs in Scotland that we, too, may bring within the reach of our people the jobs and possibilities that they have been denied for so long.
We are faced at the moment with a White Paper that does not give adequate economic power to Scotland. If that power is not added to the Bill, the Government will find—so, too, will the Opposition—that the Scottish people will assume that they have no choice but to move on to more certain ways of getting the justice that Scotland requires.
I further say, in relation to this question—and to the way in which they seek to deal with the financing of the Assembly—that the Government should consider the question of the oil revenues, which they have not so far raised. They deny that Scotland should have access to those revenues, except by a very difficult and indirect formula. We are saying in the SNP—and the Scottish people echo it very strongly—that Scotland should benefit from this substantial natural resource which has been found off our shores. We certainly do not intend to cede our proper share of benefits.

Mr. Gerry Fowler: A moment or two ago the hon. Member suggested that Scotland would have to move on to other means of achieving its objective. Was he really threatening that there would be violence in some form?

Mr. Wilson: The way to achieve the objective is to vote for the Scottish National Party. That is exactly what I had in mind. But it is very interesting to see the peculiar ways in which the minds of some members of the Government are apparently moving.
Lastly, concerning the Common Market, anyone who has studied the Report of the Faculty of Advocates, and the points it made to the Secretary of State for Scotland, will know that it will be essential to have some form of direct representation in the Council of Ministers. It is true that there may be some difficulties, but this is a point that the Government will have to renegotiate within the European Community.

6.57 p.m.

Mr. Roy Hughes: I do not propose to follow the hon. Member for Dundee, East (Mr. Wilson) into the highways and by-ways of Scotland. I do not know very much about that country, frankly, apart from the fact that for some 25 years I have been making a biennial pilgrimage to Murrayfield. I shall leave it at that.
The debate has revealed up to now that there are very strong views held on either side on devolution. I do not wish to go into any constitutional intricacies. I wish only to look at a few points on both sides of the question.
First, I feel that it is very necessary to examine the commitment of the Labour


Party, and the proposals stemming from that commitment that are now contained in the White Paper. On page 21 of the Labour Party's manifesto, issued for the October 1974 General Election, it is stated in quite clear and large type that
The next Labour Government will create elected assemblies in Scotland and Wales.
I should have thought that that was clear and specific.
Secondly, in the days of the 1966 Parliament, the then Home Secretary, the right hon. Member for Cardiff, South-East (Mr. Callaghan), set up a Commission to examine these matters. Its Report became known as the Kilbrandon Report. One bears in mind that the then Home Secretary represents a constituency in the capital of Wales, and presumably he is well acquainted with these matters. The Commission studied the question over several years and recommended elected Assemblies for both Scotland and Wales.
Thirdly, I draw attention to the minutes of a meeting of the Welsh Labour Group of Members of Parliament on 6th November 1973. I am not giving away any secrets, because these minutes appeared in the Welsh Press. They say that this group met to discuss the recommendations of the Kilbrandon Report and that it was a special, extremely well-attended meeting, 26 Members being present. That is almost a maximum attendance of Welsh Labour Members of Parliament, as the House will appreciate. The minutes go on:
The Group welcomed the establishment of an All-Wales Elected Assembly with real powers as the best means of exercising closer democratic control over those distinctive features of Welsh life.
That was a decision taken by the Welsh Labour Group of Members of Parliament.

Mr. D. E. Thomas: Can the hon. Gentleman say whether the hon. Member for Pontypool (Mr. Abse) was one of the 26 present at that meeting and whether he endorsed this view?

Mr. Hughes: As I understand it, we had a total representation of 27 at the time. I am not absolutely sure whether my hon. Friend the Member for Pontypool (Mr. Abse) was present.

Mr. Leo Abse: Will my hon. Friend make it quite clear that whatever was agreed at that meeting and whatever was stated at that meeting was

an agreement very far removed from this White Paper and limited to the idea of an elected council to supervise existing nominated bodies?

Mr. Hughes: If my hon. Friend had been patient for half a minute more, he would have heard me come to that very point, but first I wanted to underline the fact that these minutes were no flash in the pan, because there was a series of meetings at that time which went into this matter in great detail. If democracy means anything at all, however, I suggest that those who participated in the decision, whether they opposed it or were in favour of it, undoubtedly bear a degree of commitment to it.
To answer the question put to me by my non. Friend the Member for Pontypool, I agree that what I quoted was a decision taken in principle. It did not say what powers should be held by the Welsh Assembly. But it stated clearly and categorically that there should be a strong Welsh Assembly. That is my point.
I may say from a personal standpoint that I had very serious misgivings about this proposed Welsh Assembly. But as it happened these decisions were reached and agreed unanimously. Therefore, I accepted the collective view.
Fourth, I cite the fact that the Labour Party in Wales consistently over a period of 10 years has come out in favour of a Welsh Assembly. The Labour Party remains fundamentally a democratic organisation. For that reason, the criticisms of some of my colleagues now would have greater validity if they had attended the annual conference of the Labour Party in Wales and the annual conference of the national party, put forward their points of view, pressed their amendments and so on.
It should also be said that some of them would be more convincing if they did not show so much enthusiasm for the creation of the super-European State which is very much on the drawing board at present and which advocates an elected Assembly for 1978. I cannot understand why the idea is received with so much enthusiasm bearing in mind that last week the Belgian Prime Minister put forward his proposals for a superstructure which would turn this country almost into a Bavaria or a Schleswig-Holstein. Why should the critics be so concerned about


this body of power going to Cardiff? It is a mystery to me.
I come, then, to the views of my hon. Friend the Member for Caerphilly (Mr. Evans). He and I agree on most political matters. At present, however, he is advocating a referendum on devolution. That surprises me because the referendum about the Common Market was about the biggest con trick of the century and perhaps the most contrived verdict ever recorded in our history.
Then I draw attention to the attitude of the Welsh TUC. Trade union organisation in Wales from the point of view of membership is well above that for the country as a whole. The Welsh TUC has been established for only a few years, but it has become a powerful body. It supports these proposals. In fact it feels that they should be more radical.
In summing up, it may be said that all sections of the Labour Party are committed. The Labour Government have set out their proposals in the White Paper. The national party is committed. The Labour Party in Wales is committed. Welsh Labour Members of Parliament are committed. The Welsh trade union movement is committed.
I make the important qualification that those decisions are not based on the idea of separatism. I for one believe in the essential unity of the United Kingdom, as I am sure do all the other bodies to which I have referred. If we had a referendum on this matter, it would give the clear impression that the unity of the United Kingdom was at stake. Under the Government's proposals, that is not the case at all.
We have to accept as well that in just about every conceivable subject there is now a Welsh dimension. Before entering this House in 1966, I spent 10 years in the Midlands. On returning to my homeland, where politically Labour had been in control for so many years, both in respect of the Members of Parliament returned to this House and in local government also, it struck me none the less that there were very many aspects of Welsh life where Labour was not in control.
One of the key factors here is the proliferation of these so-called nominated bodies—the Welsh Council, the Welsh

Sports Council, the Arts Council, and the Welsh Water Authority. No doubt some very worthy people serve on these bodies, but let us consider their chairmen. The Chairman of the Welsh Council is Sir Melvyn Rosser. The Chairman of the Sports Council is Colonel Harry Llewellyn. The Chairman of the Arts Council is Lady Anglesey. The Chairman of the Water Authority is Lord Brecon, a former Tory Minister.

Mr. D. E. Thomas: And Lady White?

Mr. Hughes: It is fair to say that if these people were to face the electorate of Wales in a democratic way, they would be hard put to it to hold their deposits.
There is a need for all these posts to be filled and accountable in a far more democratic way than at present. In this there is a key rôle for the Welsh Assembly to play.
The Conservative Party in Wales at least is rigidly opposed to the devolution proposals. I wonder why? Over the years they have sent only a handful of Members from Wales to this House. In local government, too, they have made only a very limited penetration and often they have to be disguised as ratepayers' representatives, for example. In Wales, the Tory Party is very much an also-ran party. But despite this the Conservative Government at Westminster, together with those nominated bodies to which I have referred, have been able to exert a power in Wales out of all proportion to their numbers. An elected Assembly, it might be said, would go at least some way to alter that.
These are the few brief points I wish to make in favour, broadly, of the Government's White Paper. But on the other side of the coin, it is fair to say that people are at present hostile to further change in the method of government and all that flows from change. Their attitude is quite understandable. We have had a major reorganisation of local government, which was one of the disasters of the century. In addition we had the area health authorities and the Welsh water authorities. The right hon. Member for Worcester (Mr. Walker) and his Sancho Panza, the right hon. Member for Crosby (Mr. Page), have a lot to answer for. They should hide their faces in shame and retire from public life.


I told people in Newport at the time "All you will have to do is to pay for it" and that it what has happened.
In addition, we have had the Common Market and all its functions, decimalisation, value added tax and now metrication. Even now on the rugby field we have the 22-metre line, and I am sure that Max Boyce will be having something to say about this.
People are bemused by it all—and, besides, they are having to pay heavily for it. I have always taken a political position left of centre and I find that some of my colleagues on the Left are failing to recognise the evils of bureaucracy. Our job is to try to ensure that public bodies do not become a haven for bureaucrats, because many of the people who sit on them have no identity with our views at all. In local government bureaucracy has just about reached saturation point. I am not blaming our local representatives for that because the structure was laid down by the last Tory Government. Reorganisation was highly inflationary and has had an evil effect on the British economy. It has certainly not increased efficiency in local government.
The spotlight is now on the new position of chief executive officer. It is suggested that this position should be dispensed with. The argument might be valid. There is certainly a need to hand power back to democratically elected representatives. There is a duplication of functions between the different tiers of local authorities and a host of planning authorities all heavily staffed. We need a simplified structure for local government. I am not saying that we should do away with our county councils or our borough and district councils but we need to look again at the whole structure of local government.
Nor, in answer to the pamphlet issued by NALGO a few days ago, am I advocating larger school classes, cuts in school building or in the housing programme. But we must appreciate that the structure of local government as laid down by the Heath Government, against much advice, has proved to be a tragedy for this country.
There is now a Welsh dimension to every matter affecting Wales, and in this

respect the Government's proposals make sense. So I support them in a very broad context. But with the country's economic difficulties, and the growth of bureaucracy or which we are all acutely aware, we have reached that stage where, in the Prime Minister's words, there are too many Chiefs and not enough Indians.
There must be a clear commitment by the Government to look again at the structure of local government to bring about a more simplified and democratic system. That is the only way forward in talking of devolution.

Mr. Speaker: Once again I appeal to the House. We have had six speeches in three and a quarter hours. It is really not obligatory to speak for 20 minutes.

7.18 p.m.

Mr. T. G. D. Galbraith: My name means "son or children of the Briton"; so I was delighted that my right hon. Friend the Leader of the Opposition stated so categorically that we on this side of the House are a Unionist Party. This robust statement was very bady needed because the more one thinks about it, the clearer it becomes that the whole idea of an Assembly will be disruptive for Britain as well as being against the principles of the Conservative Party.
An Assembly, it is freely admitted, means extra taxation. Yesterday, the weakness of the block grant system was exposed by the hon. Member for Greenock and Port Glasgow (Dr. Mabon). An Assembly cannot be denied substantial taxation powers for long. One can understand the Socialist Party being in favour of more taxation, but who has ever heard of higher taxation appealing to the Tory Party? The Lord President of the Council said the other day that the Leader of the Opposition was like Salome. Well, here is one veil being pulled away to reveal to the people of Scotland that an Assembly is inseparable from higher taxation. The removal of another veil reveals that the Assembly is inseparable from more government. There will be more officials to interfere and more politicians trying to justify their existence by introducing a never-ending stream of new, complicated and, for the most part, entirely unnecessary legislation. Parkinson's Law, with an Assembly, will be very much at work in Edinburgh.
Yesterday the Prime Minister tried to make this all appear palatable by saying that an Assembly would bring Government closer to the people. The last thing most people want is to have government closer to them. The Socialist Party may mock that statement, but ordinary people do not want government closer to them breathing down their necks like Big Brother of 1984. They want to keep government at arm's length.
More and closer government is a concept which appeals to Socialists. It is anathema to the Tories because we believe in personal freedom of the individual and not in more Government control. Perhaps one should not be surprised by the Socialist Government devising a constitutional arrangement which imposed more government and more taxation. That was only to be expected. But I am surprised by the curious self-delusion they show in their expectation of the constitutional consequences of setting up an Assembly. They persist in thinking that it will have no effect upon the Union. They seem to assume that an Assembly can be hedged around so that it does not imperil the Union.
Yesterday, the Prime Minister was eloquent in his exposition of the advantages of the Union, but the Government's White Paper will smash the Union to smithereens. That is a fact. The supporters of an Assembly do not accept that argument, but will they explain why the Scottish National Party, consisting of self-confessed separatists, supports an Assembly unless it sees it as a useful first step towards separation and a weapon which it can use to reach its ultimate goal more quickly? There can be no other explanation of the SNP's support than that nationalists believe that an Assembly will be disruptive, as my namesake, the hon. Member for West Lothian (Mr. Dalyell), so eloquently proclaimed yesterday.
How could an Assembly be other than disruptive? It is just another kind of Parliament, and Parliaments are always trying to extend their powers, however carefully those powers may be limited in the beginning. Can any hon. Member imagine an Assembly in Edinburgh always being content meekly to play second fiddle to Parliament at Westminster? Meekness is simply not in the nature of Parliaments. They are assertive

bodies. There were once local Parliaments in the States of America, Canada, Australia and New Zealand, just like the proposed Assembly in Edinburgh. Those local Parliaments were subordinate to the sovereign Parliament at Westminster, but they did not stay subordinate for long. History has shown time and again that the creation of a local Parliament or Assembly is the first step leading inevitably to separation, even when it begins with no thought at all of separation.

Dr. M. S. Miller: Dr. M. S. Miller (East Kilbride) indicated dissent.

Mr. Galbraith: The hon. Member for East Kilbride (Dr. Miller) shakes his head. I believe that he has had close connections with the Leader of the House, who is not here. I would like him to see that the Government explain, as they have a duty to do, why an Assembly in Scotland would be an exception to the rule that Assemblies inevitably lead to separation.
Many hon. Members have spoken of the inevitability of conflict, and that conflict will not be of the ordinary constitutional kind such as sometimes arises between this House and another place. It will be far more dangerous than that. Such a conflict will be emotional, arising from feelings of national pique and national envy. The Labour Party has a great deal to answer for in that context. It would be amusing were it not so serious to see the chickens the Labour Party has hatched coming home to roost and causing it discomfort.
For generations, the Labour Party has been preaching envy. It has been saying that the rich have been depriving ordinary men of their due. That has been its message for generations. The nationalists have fastened upon the spirit of envy created by the Labour Party, and, since the rich no longer exist, they are able to turn that spirit of envy against England and the so-called London Government for having deprived Scotland of her due rewards. This envious sense of grievance has been strengthened by criticism of the present arrangements implicit in the radical suggestions for improving government, such as the setting-up of an Assembly.
The present road to hell, if I may describe it as such, along which we are travelling derives from the no doubt well-intentioned declaration which my right


hon. Friend the Member for Sidcup (Mr. Heath), then Leader of the Opposition, made at Perth in 1968, echoed today in the speech by my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith), the Shadow Secretary of State for Scotland. People have come to think that Scotland is neglected and is badly governed and that its MPs do not get a fair chance here. But such views stem from ignorance.
It cannot be said too often that Scotland is not and has not been neglected and is not badly governed. The Prime Minister pointed out yesterday that the projects at Bathgate, Linwood and Ravenscraig were all vital developments which were brought to Scotland by the Government of Great Britain—although he did not mention that they were brought to Scotland by a Conservative Government.
Nor is there any special Scottish interest to neglect. There are the farming interest, the fishing interest, the oil interest and the heavy industry interest, but those interests are shared with the rest of the United Kingdom.
We are always hearing about the deprivation of the Clyde, but let the Scottish people visit the Tyne and Merseyside. They will see the same sort of thing. It is not a Scottish problem but a British problem. It is not that the conditions on Clydeside are common to the whole of Scotland. Plenty of Scotland is booming, including the seat of my hon. Friend the Member for Aberdeen, South (Mr. Sproat). He has a seat of which he is proud and which he won from the Labour Party. It is booming. Scotland is not all deprived. But if an Assembly is set up it will be dominated by Clydeside in a way in which it could never dominate Parliament. And this impartiality of Parliament, this concern for all parts of Great Britain, may not be the least of its merits, and the greatest weakness of an Assembly in Scotland.
Again, because of their small numbers, Scottish Members of Parliament have twice the opportunity of questioning Scottish Ministers that their colleagues have to question English Ministers. We have heard much in the debate about the quality of government and the control of bureaucracy. I have served in the United Kingdom Department for the Admiralty and in the largely English Ministry of

Transport as well as at the Scottish Office, and I am convinced, as a result of that experience—which I do not believe has been shared by any other hon. Member of the present House—that there is a closer scrutiny by Members of Parliament and by Ministers of the work of the Scottish governmental machine than that of any other Department because it is more intimate in size. An Assembly will not improve on that situation.
I emphasise once more that the Government's proposals for an Assembly are playing with fire, and they must explain why they think that such proposals will not inevitably lead to separation. I am sorry that there is not a more senior member of the Government here than the Lord Advocate. [Hon. Members: "Oh."] Am I not entitled to say that? Is this not the most important debate in my 28 years in Parliament? We have not even got a Cabinet Minister present to answer. I am entitled to say that.
I hope that the Lord Advocate will ensure that someone explains the reasons for the Government's optimism and why they think that my fears and the fears which have been expressed by other hon. Members about the disintegration of the United Kingdom if there is an Assembly, are groundless.
Although my family is British in origin, as I explained at the beginning of my speech, I am naturally proud that changes through the centuries enable me to say that I have become a Scot. However, despite this I must admit that I am far more proud of being British. It is Britain—not Scotland, England, Wales or Ireland, but the conglomeration of us all—that has given so much to the world.
I do not want to see this noble edifice split into small and insignificant constituent parts. We are Britons or we are nothing. It is an illusion to think that there is any middle course between Union and separation. An Assembly is not a middle course. It is merely a slow and painful but inevitable road towards disruption. Let us remain a United Kingdom—one country with one Parliament. Let us make that Union more real not by the proliferation of Parliaments but by spreading throughout the country the headquarters of our great institutions, of our Civil Service and our nationalised industries so that all the people of these


islands may enjoy the fruits of Union. That, surely, would be an endeavour worthy of our country's great history.

7.32 p.m.

Mr. Peter Hardy: My right hon. Friend the Lord President, towards the end of his speech, described the Government's proposals as a landmark. I hope that the House will not think me entirely irrelevant if I commence my speech by referring to a landmark in my own constituency. I see that my hon. Friend the Member for Penistone (Mr. Mendelson) is present. He will know to what I am referring.
The highest point of ground in my constituency is at the relatively modest height of only 500 feet above sea level. However, it is surmounted by a monument, Hoober Stand, constructed in 1746 to commemorate what was described as the victory at Culloden. We should perhaps refer to it as a butchery. That monument also commemorates the unity of Great Britain. It was an expression of aristocratic confidence, but it was also an expression of belief that this island could prosper in unity. That monument has been affected by the ravages of time and it is now in dancer.
I believe that the unity of this island is perhaps in greater and more imminent danger than the monument to which I have referred. It is because I believe that we tend to move rather too rapidly in these areas that I speak tonight. Moreover, I heard a speech in the House during the Chrysler debate which gave me great cause for thought. That speech was given by one of the Members of the Scottish National Party. In referring to the very important and complicated Chrysler decision he said rather superficially that we could save Chrysler with three days' oil revenue.
I visit Scotland regularly and I have watched the Scottish National Party with interest for about two years. However, it seems to me that its spokesmen have given a day or two's oil revenues here, a day or two there and a week or so somewhere else. In my view a large part of the Scottish oil revenues have already been committed, and not always committed to purposes which will serve the long-term good of either Scotland or the United Kingdom. Of course, Scottish

National Party Members cannot be blamed, as practising short-term politicians, for distributing the largess of North Sea oil. They have had to capitalise North Sea oil because they know that, especially in hard times, dreams and visions of wealth have a real attraction for people. The Scottish National Party has certainly used it.
These proposals have to stand the test of time. My right hon. Friend the Prime Minister made that point. They have to stand for a rather longer time than all the estimates suggest offshore oil will be available to Scotland. One of my hon. Friends stated in the debate yesterday that the Assembly could use a proportion of the oil revenues to carry out its devolved activities. I hope that if we are to have an Assembly we shall look at the matter on a rather longer time scale than the 10, 20 or 30 years we expect Scottish oil to flow.
I believe that this image of opulence is really an echo of history and that historic parallels can occasionally be repeated and discerned. In 1745 Bonnie Prince Charlie initially obtained very little support until, after the early victories, the Scots decided that there were easy pickings. However, there was great disappointment in the end. It seems to me that the vision of offshore oil which the hon. Member for Aberdeenshire, East (Mr. Henderson) peddles around Scotland is one which in the end will bring bitter disappointment to the people.
I am anxious about Scotland's situation but as an English Member I am anxious about the situation of the English regions. Much reference has been made to local government reorganisation. I am not sure that we have found a way to ensure that fecklessness and thriftlessness do not accompany our constitutional and political arrangements. I believe that before we embark upon any more growth in political and governmental structure we should ensure that we have a capacity for prudence and caution which has not yet been displayed. I do not want to look back on the seventies and see only two growth activities—property speculation in the first two or three years of the decade and a growth in government structures for the rest of it. The problems which the Government are devoted to solving—the problems of appeasing the current dissatisfaction of


the people of this island—cannot be solved by Government structuring. They can be solved only by the creation of wealth.
Last Friday we had a meeting in Yorkshire at which we heard a great deal about the needs of our region. Some of the people who attended that meeting said that we must ensure that we do not maintain the present weaknesses, which are serious for the whole of Great Britain. At present in our universities and colleges there is far too great an interest in politics, business studies, political science and various other fringe activities, interesting though they may be. There is not enough interest in the application of science to the development of technology on which alone we can rely for prosperity. We cannot ensure that the British will live together in a state of decency and happiness except by a devotion to prosperity rather than to the provision of all sorts of opportunities for political gatherings.
I agree with my hon. Friends and hon. Members who say that there are far too many non-elected bodies in Britain. I hope that one day we shall find a way of ensuring that democracy is served. I am concerned that unless we serve the cause of prosperity, all we shall do is give people more and more opportunity to abstain, and that does not seem to me to be a particularly healthy exercise.
I began my speech with a local reference and I should like to conclude by referring to it yet again. Many people regard monuments of the type I mentioned as follies, but in my view such a term will not always be deserved. Some of these follies serve a useful purpose in enhancing the landscape. I believe that we can create even greater follies in the twentieth century.
My hon. Friend the Member for South Ayrshire (Mr. Sillars) was right when he made it clear that if the Scots want independence it cannot be denied them. If they wish to be independent we cannot prevent them from achieving that independence. However, I believe that if they were to grasp that independence it would be a great folly not merely for Scotland but for the whole of this Kingdom, which should continue to be united.

7.40 p.m.

Mr. Wyn Roberts: As I intend to touch on a number of the points made by the hon. Member for

Rother Valley (Mr. Hardy) I shall not deal with his speech in detail now.
I should like to begin by saying that, for a long time, devolution has been the cause of what I should call political enthusiasts. The Government are now trying to bring it down to the level of practical politics. What Balfour once said of the enthusiasts is still apposite, namely:
It is unfortunate, considering enthusiasm moves the world, that so few enthusiasts can be trusted to speak the truth.
Certainly some of the claims and arguments advanced for devolution have lacked the sharp tang of reality and have been wildly, hopelessly idealistic. For those who favour it, devolution has become the abracadabra of current politics—the answer to all our current problems, as my hon. Friend the Member for Devizes (Mr. Morrison) implied. But the Government are at least finding out that, far from being the answer to our problems, devolution itself is a problem that poses many others which are equally intractable.
For the nationalists, devolution is the "Open Sesame!" to their cave of oil-rich dreams and motley aspirations, or, perhaps, more appropriately, devolution is the magic word that will arouse Arthur from his slumbers. Devolution will certainly open new doors for the nationalists, but they will be doors to new realities, not to the dream worlds that they cherish.
I wish that a better grasp of these realities would be shown by those who call for more independence for Wales and for more English money in the same breath, and those who continually tell the Welsh electorate that if only Wales were left to her own devices the people of Wales would be better off, when they know, or should know, that that would not be so. I would have far more respect for Plaid Cymru if its members occasionally told the Welsh people the truth—the truth about the real cost of independence and the sacrifices that would have to be made in that event by each and every one in Wales.
The Leader of the Liberal Party yesterday pointed out that devolution brings the Liberals directly into line with Gladstone. So long as they stand in the shadow of that great oak, I am sure that they bask in contentment.
What are the Government's motives for promoting devolution? Is it another step back into the past, like their return to the social contract? To whom are they going back this time? Is it Jefferson or Hume, perhaps, who talked about devolving upon others the weight of government? I should point out to the Government Front Bench that there is a much easier way of unburdening themselves. They can resign at any time they wish.
Seriously, why are the Government advancing the cause of devolution at this stage? This Government's motives are always political, I regret to say, in the worst sense. The Prime Minister can say, with Disraeli, that in politics nothing is contemptible, but he has elevated the statement into a principle and practised it with a vengeance. His solitary claim to fame as Prime Minister is that he has kept his party together for the sake of office. No sacrifice has been too great for that greedy and voracious altar. The right hon. Gentleman is now about to make the biggest sacrifice of all—the unity of the United Kingdom—for the sake of his party's future prospects of office. It will be the biggest sacrifice that this country has yet been asked to make for a Socialist Government. But I am bound to tell right hon. and hon. Gentlemen opposite that I cannot for the life of me see how devolution will take the heat off the Labour Party. I do not think that the Prime Minister can see it, either. It may be that that is the reason why he is delaying matters. He is afraid of being hoist with his own petard. Surely that is what will happen.
The more we talk about devolution, the more credibility we give to it as a worthwhile solution and the more we fan the flames of its extreme forms of federalism and separatism. It has already happened in Scotland, and it is happening in Wales.
Those who have studied devolution realise that it is a constitutional concession for economic and social shortcomings on the part of central Government. Those who press for devolution will not rest until they have full control over their economic and financial affairs as well as other matters.
The SNP may know what it is doing, and has some grounds for hoping that

if it had full control over the Scottish economy it might prosper, but the Welsh economy is a very different matter altogether. We have no oil revenues to tap, and those who suggest that an independent Welsh economy would prosper are seriously misleading the Welsh public.
There are two very different standpoints from which to consider the economic and financial aspects of devolution—the standpoint of central Government and that of the citizen. From central Government's viewpoint, Scotland and Wales have each had more money spent on them than they have contributed by way of taxation. I need hardly remind Welsh Members of the conclusion of the Welsh Budget for 1968–69 published in 1971. It was as follows:
In short, the estimates in this paper suggest that on any reasonable set of assumptions, there was large imbalance between central government expenditure and revenue attributable to Wales in 1968–69.
I have no reason to believe that that position has changed in subsequent years. In fact, the demands for increased expenditure in Wales by central Government have been growing all the time and, as we know only too well, central Government's capacity to meet these demands has not grown at anything like the same pace.
The block grant system proposed by the Government will help to set a limit on regional demands. From central Government's point of view, this is a considerable advantage, but it is not advantageous from the point of view of the subject living in the region concerned.
Of course, much of the criticism for deficient services will be deflected temporarily from Westminster and Whitehall to the Assemblies in Cardiff and Edinburgh and the regional Governments that they control. This deflection of criticism is happening currently with the local authorities whose rate support grant, incidentally, is roughly comparable with the proposed block grant to the Assemblies. This deflection of criticism is again advantageous from central Government's point of view, but I wonder how long that advantage will last. Westminster and Whitehall, the source of the block grants, will come under the joint attack of Members of Parliament and the Assemblies, and there will be greater


disaffection than ever before. Who knows to what wild solutions this will lead?
The Government think that they have an answer in that, if the Assembly's expenditure exceeds the block grant, the additional money should be raised by a surcharge on the rates. About three-quarters of a million Welsh ratepayers would gladly say "Amen" to that, I am sure. Many industrialists and business people, whom we need to attract to Wales, would no doubt consider it a privilege to shoulder this additional and limitless taxation. Let the Government be under no illusion. This proposal for a surcharge on the rates is anathema to the people of Wales.
The rating system is unjust as it is. To increase the burden of rates on this account would be intolerable. To ask Welsh ratepayers to pay for the whims of a Socialist-dominated Assembly spurred to increase expenditure by the extravagant promises of their rivals for power would be insufferable to the people of Wales.
There is talk—we have heard it in this debate—of removing one tier of local government, presumably the most unpopular, and probably the county councils. What a reductio ad absurdum of it all this suggestion is, for we are to remove one tier of local government to make room for another, more remote from the people. The services provided by the removed tier will still be necessary, and whether responsibility for their provision goes up or down the hierarchy of Government, I cannot believe that there will be any significant economies. The truth of the matter is that the suggestion of eliminating one tier of local government is an attempt to make these unpalatable proposals palatable. You cannot sweeten wormwood, and you, Mr. Deputy Speaker, would not have the gall to try.
It is time that we looked at these proposals from the standpoint of the subject—the subject as the ordinary man—and asked ourselves what possible benefit for him there can be in devolution. We have heard remarkably little about him in the course of this debate, and I do not think that the case for devolution as benefiting the ordinary subject has been made out at all by the Government.
We are told in the White Paper that the great benefit to be derived from devolution is that the decision on expenditure priorities will be brought closer to the people. Are these priorities so different in different parts of the United Kingdom? I do not believe that they are. We all want schools, hospitals and all the other ancillaries of a civilised society. There are, of course, differences between the various parts of the United Kingdom about the extent of their need and the strength of their claims, but these differences exist within Wales and within Scotland, and devolution is likely to exacerbate these differences rather than soften them.
Certainly in Wales we shall have an Assembly dominated and ruled by the industrial South—and let us not forget that Cardiff is almost as physically remote from Anglesey as is London, and the likelihood of sympathy and understanding from the South for us in the North, and for our needs, is a subject that will engage our optimism in working overtime, and praying overtime, too.
It was urged by the Leader of Plaid Cymru yesterday that the creation of a new regional tier of government with a national dimension will release new energies. The argument is as old as Karl Marx, or the Leader of the House. It is as phoney in the nationalist context as it has been in the context of nationalisation. Men are wise enough to work for wages. Only politicians work for ideals, and we should not credit others with our own folly.
The ordinary man will be as critical as ever—as he has every right to be—of the new governmental set-up, and he will see at once that he is grossly over-governed, not only in the sense that he is subject to so many tiers of government and their consequential bureaucracies but in the sense that politics will loom larger in his life than he considers appropriate. Politics will permeate his life. Everything will be political, and he will not like it.
The proposed form of government for Wales is that of an executive committee with all-party, subject committees. Under such a system, public criticism will tend to be directed against the subject committees as a whole rather than against the party in power. We have seen this happen in local government. This is very


invidious and the system provides fertile ground for corruption to flourish. Party rivalry does at least help to keep politics clean, whereas the cosy relationships that are likely to develop in the Welsh Assembly committee can but breed bad government.
What does all this amount to? I detect behind these moves towards devolution a policy on the part of central Government of cutting down support for the regions. I am aware that I take a different view from that taken by many who have spoken in this debate. It seems to me that someone, somewhere, has decided that central Government cannot continue to provide the resources necessary to sustain and develop the regions as they need to be. Someone, somewhere has decided that there should be stricter limits on expenditure and that central Government had best shed responsibility as soon as possible, especially for those areas of expenditure in which little increase can be anticipated in the years ahead. Devolution has its subtle part to play in all this, and those who are crying for devolution now will, I prophesy, be crying over its failure and the ruin of their aspirations in a few years' time.
If devolution is to be ventured upon, I would wish to see it tried in an era of prosperity, not recession. In prosperity, it might have a chance. In recession, it has none. I warn hon. Gentlemen below the Gangway on the Opposition Benches that what they are looking at in the Government's proposals is a Trojan horse designed, they may be sure, not to further their interests but to protect the interests of the Labour Party. The fact that the artificers of this device appear to be having second thoughts should make us all pause, including the nationalist parties.
I believe in devolution, but as part of an evolutionary process and not as a revolution forced upon a weak but devious Government by nationalistic pressures arising from frustration. I want devolution that will be a success, not a failure. We can learn something from the French in this. De Gaulle embarked upon devolution for the French regions. Despite the defeat of his proposals in the referendum of 1969 his successors have tried to move ahead, but the French President's latest pronouncement is significant. "We can-

not afford it" he said, and their proposals were far less extensive than ours.
How can we afford devolution? Is our economy all that much healthier than the French? I do not believe that we can afford it either, but the Government will try anything. They have gambled with the unity of the United Kingdom and with the welfare of millions of its people in a desperate attempt to stay in office. They will lose that gamble. Unfortunately, I think that the British people will lose too.

7.58 p.m.

Mr. John P. Mackintosh: I was glad to hear the hon. Member for Conway (Mr. Roberts) cite France, because it is an interesting fact that France and Britain are the last two remaining markedly centralised countries in the Western World and are the two countries in the Western World that are facing political discontent in their regions. There is trouble in Scotland and Wales, and there are political difficulties in the same way in Brittany and Corsica.
The hon. Member for Glasgow, Hillhead (Mr. Galbraith) said that having subordinate Assemblies was a recipe for disaster, and he produced a new and fantastic interpretation of history that wherever there are subordinate Assemblies a country breaks up. Has anyone explained that to the United States of America? They will be interested to hear it. What about Canada, Australia and West Germany? They do not have the kind of trouble with their regional or subordinate nationalities that Britain and France are having simply because these two countries are attempting to run a vast complex country from one political centre.
The other question taken up by the hon. Member for Conway was that of over-government. I think he ought to be clear that the two-tier system of local government was thought up before the British Government thought it would have to go for devolution. It was always clear to those of us who gave evidence to the Wheatley Commission on Scottish local government as well as to those on the Commission who received it, that the original district and region two-tier system was an alternative to a devolved Assembly with a single-tier of local government beneath it. I am sure that it


was a mistake to proceed that way around and reform local government first, but if Assemblies are set up, certainly the Scottish Assembly will have the full power to reorganise the subordinate structure of local government. It would be madness if over-government and its dangers were not removed by the abolition of one tier of local government. We shall need only an Assembly with one tier below it. That is one thing which will bring great relief to the people of Scotland.
I am glad that the hon. Member for Glasgow, Hillhead has returned. He asked for an explanation of the fact that the Scottish National Party supported this measure for an Assembly. It is because, electorally, they can do nothing else. They must support it because 60 per cent. of the Scottish electorate want it and they cannot be for Scotland and not for a measure of devolution.
I met a senior Member of the Scottish National Party outside a few minutes ago—a man for whose intelligence and discretion I have the greatest respect. I asked him how he was enjoying the debate, and he answered, "I love it. I love these Unionist speeches. They pile up the votes for us in Scotland." I asked him what frightened him, and he replied, "What I really fear is an effective devolved Assembly in Edinburgh and an upturn in the British economy". Those are the two key factors which will render nationalism ineffective and will destroy the Scottish National Party.
I have listened to this debate with care. I know that historical analogies sometimes bore this House, because we tend to forget our past in many ways, but if hon. Members turned up past volumes of Hansard they would see that this debate reproduces almost identically the debates which took place on the Home Rule Bills for Ireland. Hon. Members may forget that those Bills did not offer Ireland independence; they offered her devolution, they offered the kind of thing that we are offering, particularly to Scotland, in these proposals. Again and again the arguments were deployed that we have heard in this debate—that everything in London was best, that London knew what was good for the Irish and that the Irish could not cope with government themselves, that there would be problems with Irish repre-

sentation here and so on. Every one of those problems was canvassed, and what happened to the unity of the British Isles and the United Kingdom after 30 years of this House refusing the demand of the Irish people for devolution? We drove them into the arms of Sinn Fein.
I am amazed at those who talk about the unity of the United Kingdom yet do not ask themselves why we drove the Irish Republic out. We did so because we denied the Irish the legitimate measure of self-government on internal matters from Dublin, when it would have been for the whole of Ireland and not for the North and the South as separate entities.

Mr. Galbraith: But surely the difference between the condition in Ireland and that in Scotland is that in Scotland we have all had the vote for generations and in Ireland it was when the vote for the Irish, as distinct from the Protestant ascendancy, was introduced that trouble arose.

Mr. Mackintosh: The hon. Gentleman has just contradicted himself. Yes, we have the vote in Scotland and we are using it as the Irish used it—in expressing the desire for a limited measure of self-government from Dublin. They were refused that demand with the kinds of argument that the hon. Member and others have used today, and we eventually drove the Irish into the arms of Sinn Fein.
In Scotland at present, 60 per cent. of the electorate say that they want a further measure of devolution and self-government to Scotland. Only 20 per cent. say that they want independence. But at the moment, the SNP gets far more than 20 per cent. voting for it. That is because so many Scots people think that only by voting for the SNP will they get devolution and reasonable treatment.
There is some truth in that argument. Those of us who pointed out that the Scottish Office was a large bureaucracy in Edinburgh dealing with Scottish housing, health, roads and agriculture, over which we did not have adequate control, and who therefore argued the case for devolution, got a very frosty answer so long as there was no electoral steam behind the demand. When the steam came, then came the concessions.
So there is some truth in the argument that the only way that the 20 per cent. of the Scottish electorate who now want independence can be translated into a majority is for this House to go on behaving as it has done, refusing reasonable concessions on local self-government to the Scots in their own name. That is the way to destroy the unity of the United Kingdom. That is why the French analogy and the British analogy fit, because those two over-centralised countries are struggling against the same kind of pressures on their peripheries. The decentralised countries do not face this problem.
I have failed in this matter, because I was unable, in the days when I preached devolution on democratic grounds, to convince my colleagues and the people in Scotland. So why now is there this large majority in favour of devolution? There is an apparent paradox here. That paradox is that I do not believe that people in Scotland have any greater faith in Parliaments, politicians and parties than anybody else, than any of the other citizens of the United Kingdom who are fed up with these institutions.
If one prods the average Scotsman in the street and says "Are you thirsting to elect two MPs to Edinburgh?" he is slightly puzzled. Of course he does not want another apparatus of government. But if one then says, "Do you think you should have a measure of devolution and control of your affairs?" he agrees, because—the hon. Member for Dundee, East (Mr. Wilson) put it clearly—the Scots are fed up with the product of British Government. They feel, as so many say to me in the street, "We could not make as big a balderdash of it as they are doing down there. Why can we not handle it ourselves?" They are thinking, of jobs and houses and the environment.

Mr. John Stokes: But surely, with the present Government, people in England think the same thing.

Mr. Mackintosh: The hon. Gentleman makes a perfectly good point, but in England the frustration goes in different directions. In Scotland, there is a way of opting out, and this has become a political reality.
Hon. Members may say, suppose Scotland had a devolved Parliament and the amount of money suggested in the White Paper. Could they do a great deal more about those things? I believe that we could adjust our priorities, that we could do some things a good deal better, that we could cut out one tier of local government, but I take the point that we could not make a great big difference. That is perfectly true, but the feeling and the sentiment for greater self-government exists, and when this exists, it becomes a political reality.
That is one strong reason that I do not think that the option put forward with such sincerity by my hon. Friend the Member for West Lothian (Mr. Dalyell) is on. He and others say that we could still refuse any concessions. But I believe that because the desire for an element of devolution associated with a general frustration exists in Scotland, to refuse to grant anything now would seriously endanger the unity of this country: it would be to grease the skids down the slippery slope. We are embarked on a slippery slope. We are halfway down the slippery slope right now. The problem is, can we dig a groove halfway down the slope so that there is a resting place where we can take a stand and maintain a stable position? I believe that this resting place will be difficult to find, but the only way we can find it is by some measure of devolution.
The option of independence exists but I believe that it will come only if there is no devolution or if devolution is a failure. Those are the two dangers. There is no danger-free course, but the only way that we can get through this difficult period democratically and satisfactorily is with a measure of devolution which creates a Scottish Assembly and absorbs the energies of the Scottish people, making them feel that they are looking after their own affairs in Scotland and that they can be proud to be British in foreign affairs, defence and overall economic activity.
I am sorry that the debate has strayed so far from constructive suggestions. I have three quick suggestions to make. The unfortunate reception that the White Paper had in Scotland was not because its general tactics are wrong. The idea of devolving preponderantly the work of the


Scottish Office and providing a block grant for it is right. The mistake is partly in presentation and partly in the nervous reservations that indicate fears of what an Assembly might do; fears which, if they were justified, would make good grounds for not having an Assembly at all.
My hon. Friend the Member for South Ayrshire (Mr. Sillars) was right. Once we get a Scottish Assembly it will, oddly enough, represent the Scots, and just now the Scots do not want independence. Why should there be an independent Assembly when the vast majority of the Scottish electors do not want it?
The White Paper proposes far too many confused and different powers to the Secretary of State. The powers are correct. They should be reserved but not all in the hands of one man and particularly not in the hands of a United Kingdom party politician. We are giving to the Secretary of State, first, wet nurse functions. He sets the Assembly up, decides its Standing Orders and fixes the pay and conditions. Secondly, he has the disallowance powers—the power to say what is ultra vires, what is wrong on policy grounds and what should be stopped on executive grounds because it is unacceptable to the British Government. Thirdly, he has continuity powers. He has to choose if there are three parties in the Assembly—and I think there will be three strong parties—a leader from one of them.

Mr. Henderson: What is the third party?

Mr. Mackintosh: From the way in which it has behaved tonight, the Conservative Party without a doubt. I have listened to the constitutional poppycock produced at the Dispatch Box by the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) and I am sure that the Conservative Party has dug a hole for itself and will be lucky to be represented in the Assembly.
As the situation stands, there will probably be three parties. We have given to a United Kingdom party politician the job of saying to the leader of one of them, "You form a Government". It will be a fixed-term Assembly. If the Government broke down, the situation would not be resolved by a General Election in Scotland, but someone else would have

to be appointed from the Assembly to organise a new majority. This requires an involvement in politics unsuitable for a party politician who may come from another party.
He will also be the same man who, under these proposals, will disallow laws if they are contrary to policy. There is the alarming prospect that the Opposition in the Assembly would be tempted to say "We have a majority in Westminster although we are in opposition here. If this measure is passed we shall ask the Secretary of State to veto it." This is a recipe for conflict which I hope will be dropped when the Bill is framed. Provision could be made for every one of the powers given to the Secretary of State to be handled in a manner which would not exacerbate political conflict in this way.
We should also have devolved more completely certain Scottish Office powers. There is no reason why part of agriculture and fisheries should be kept undevolved. There is no reason why the salmon should be a devolved animal when it is in a river and a federal or Westminster animal when it reaches the mouth of the river. There is no reason for holding agriculture and fisheries back.
The Scottish Development Agency should be devolved in its entirety. That is the level of economic teeth we want in the Assembly, and it would be workable. The Scottish legal system should have been devolved in its entirety. It is one of the most special characteristics of Scotland. To devolve the law but not prosecution is crazy. To devolve one bit of private law but not the court system is a muddle. These matters could be tidied up between now and the time the Bill is presented. The Bill would then be acceptable and workable. I hope that my hon. Friends will take this into account.
I am deeply worried about the future of the United Kingdom. I know that Scotland could exist if it was independent, as could England. But remember that we have suffered the loss of the Republic of Ireland to the permanent impoverishment of both Britain and Ireland. I do not want this to happen vis-à-vis Scotland, but it will happen if the insensitivity displayed in this kind of debate by some hon. Members is allowed to run riot. It will happen if the Assembly is weak and


ineffective. We must grasp this nettle with confidence and courage and produce the kind of subordinate Assembly that will make the Scots happy to remain part of the United Kingdom.

8.15 p.m.

Mr. Robin Maxwell-Hyslop: As many hon. Members wish to speak, I intend to confine my remarks to five minutes, and my observations to devolution as it affects England only.
Yesterday the Prime Minister, doubtless through a lapse of memory, propagated a myth that because of the outcome of the 1970 General Election there are now two tiers of local government, whereas had his party won that election there would have been only one. I was in the House at the time when the right hon. Member for Grimsby (Mr. Crosland) came to the Dispatch Box—his party was then in opposition—and accepted on behalf of the Labour Party the majority recommendation of the Redcliffe-Maud Report. That Report recommended a layer of regional government as well as a single tier of more local government. In other words, the question was not whether there should be one or two tiers but whether the second tier should be a remote one at regional level and the first tier a comparatively remote one at county level. We do not need to repeat that argument.
People in England want the total burden of taxation and government reduced. Layfield will shortly be giving us his Committee's observations on the redistribution of the financial burden, but we must not lose sight of the aim of reducing the totality of that burden. Now that we have a strong system of local goverment at district and county levels, devolution in England should take the form of a transference of more power from central to local government. We should not set up another layer at regional level which will have to be staffed with third-rate civil servants plucked from we know not where but paid by we know whom—the British taxpayer. Either we want a competent Civil Service in London to take the decisions that have to be taken in London or we want decisions taken by the directly elected first- and second-tier local authorities that currently exist. This is how we get a reflection of authentic local opinion and democracy in action at local level.
The fallacy is in setting up regional organisations in regions the boundaries of which are themselves often quite meaningless. An example is the South-West Region. Senior civil servants admit that that region is totally without meaning—that it is what is left when a reasonable line has been drawn round some other areas. The South-West, together with Cornwall, is the area whose people rose in Monmouth's rebellion. That is the community of interest.
Therefore, I recommend for England more power to be given to the directly elected first- and second-tier local authorities that exist, with a smaller overall Civil Service in this country. If we do that we can achieve the objectives that I outlined at the beginning of my short observations.

8.19 p.m.

Mr. Russell Johnston: A number of speakers in the debate, and perhaps not least the hon. Member for Tiverton (Mr. Maxwell-Hyslop), have tended to confuse administration and legislation. For me, the establishment of a Scottish Parliament—as I prefer to call it—is not a step towards creating some kind of super local authority administration; it is a means of creating a legislative focus in Scotland, which is an entirely different thing.
The Leader of the Liberal Party, my right hon. Friend the Member for Devon, North (Mr. Thorpe), set out the basic Liberal position yesterday, and I do not wish to go over that again. Essentially, we are federalists. I repeat this, so that there will be no doubt about the matter. We believe what Lord Acton said in the last century:
a great democracy must either sacrifice self-government to unity or preserve it by federalism,
and that
a State which is incompetent to satisfy the different races within it condemns itself.
This is a logical position. Basically, it means that we believe in the division of powers as between the central Westminster Government and the State Assemblies, and that this is the only way in which one can, as the hon. Member for Berwick and East Lothian (Mr. Mackintosh) put it, put a nick in the slippery slope—a holding or resting place. That is our opinion. It is, incidentally,


an approach that is by no means confined to the Liberal Party. We find federalists in the Labour Party. Last night, the hon. Member for Glasgow, Springburn (Mr. Buchanan) was confessing to it. The hon. Member for South Ayrshire (Mr. Sillars) was basically outlining a federalist attitude. People such as Alex Kitson, in the trade union movement, are well-known and convinced federalists. Probably about a quarter of the Scottish population, according to opinion polls, would support that kind of approach.
Nevertheless, I must face facts as a politician and a realist. At the end of the debate, or when the draft Bill is produced, I must face the fact that I shall not get federalism. So what do I, as a Liberal politician, do in the circumstances? What do I do as a Scotsman anxious to see produced for his country a form of government that is better than what exists now?
Frankly, I was very disappointed by the way in which the Prime Minister approached the debate yesterday. It seemed to me to be quite wrong, at the beginning of what was spoken of as a great debate on what is indubitably a great issue, for him to say that the White Paper was marvellous and then to bash as much debating stick as he could out of the SNP, Plaid Cymru, Liberal and Conservative policies and to say that all the policies advanced by the various parties were really illogical and not very sensible.
That is not the right way to approach the matter. The right thing for the Prime Minister to have done would be to admit, first of all, that the White Paper has been widely criticised. It is true. Let us face that. The hon. Member for Dundee, East (Mr. Wilson) mentioned the Scottish newspapers on the morning following publication of the White Paper. The Daily Record:
We were promised more. We want more.
The Glasgow Herald:
Charter for Conflect.
The Scotsman:
'Instant fury on plan for an assembly in chains.
The Express:
Staggering. Fury erupts over home rule plan.

That was a common line throughout the Scottish Press.

Mr. Adam Hunter: Produced in Manchester.

Mr. Johnston: As I recollect, Charlie Graham does not live in Manchester.
However, the basic thing is that there was criticism of the White Paper, and this continued from all sides, sometimes from the point of view of those who said that it went too far and would, as a consequence, lead to the break-up of the United Kingdom, and sometimes from the point of view of others who said that it did not go far enough and would lead to the break-up of the United Kingdom. We must face that fact.
I do not believe that in a stiuatoin in which so many different points of view are being expressed and in which there is such a degree of confusion, equally, among the Scottish people themselves, as has been evidenced by the opinion polls that have been taken, such an important and constitutional change can be successfully resolved by the pursuit of partisan party politics. It does not really matter to me, or, I suspect, to very many people in Scotland, whether the hon. Member for South Ayrshire, whose stand I greatly admire, is right or wrong about the NEDC document. It does not really matter whether the hon. Member for Aberdeen, South (Mr. Sproat) was right or wrong in saying that the Oppositon Front Bench spokesman—the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith)—was right or wrong in interpreting Opposition policy. How can we, in a situation that is fairly messy, achieve a reasonable degree of consensus and agreement on a starting point that all of us, in our different parties, can accept for a beginning? That is the most important thing.
We must face the fact—the hon. Member for Berwick and East Lothian did so bluntly—that many people in Scotland and quite a number, but fewer, in Wales, felt so frustrated with what they had, rightly or wrongly, that they chose to go out and vote nationalist where otherwise they would have voted Labour, Conservative or Liberal. They did that because they wanted a change. We must face the fact that that situation may grow worse. It is not a sudden convulsion


that we have gone into; it has been smouldering for a long time, and we must now face it.
Nor, for that matter, is it a matter of logic. I understand it, but I find it a little sad in some ways to listen to well-meaning, well-intentioned and good-hearted English Members saying. "These exaggerated claims are not reasonable, logical or sensible." It is not a mater of logic; it is a matter of emotion. If we reject Scottish self-government or, for that matter, Welsh self-government because it does not seem to be logical, I am afraid that we fail to understand it. It is a matter of the spirit and of the feeling of community. It is in many ways a primal, atavistic force that is let loose in modern times. People feel the way they feel, and there is no explaining or rationalising it. We have to recognise it and to deal with it, and try to direct it in a fruitful and constructive direction.
That is what worries me very much. I agree with the general line that was followed by the hon. Member for Berwick and East Lothian. If this House, because of confusion or something else, does not recognise it adequately, we could have quite a lot of trouble. I speak as a Scot—it does not matter to me for how many generations—but I am afraid that the Scots have a great tendency to quarrel among themselves. It is one of our great weaknesses. Our history is full of the establishment of self-righteous groups who set themselves up as the only right-thinking people.

Mr. Heffer: The English are not bad at that, either.

Mr. Johnston: Modest contributions from the hon. Gentleman are always welcome.
However, if this boiled up in Scotland it could be quite serious. God forbid that the madness that has gripped Ulster should ever cross the Irish Sea in any form.
The danger of the SNP—this matter was touched upon by the hon. Member for Berwick and East Lothian—is that it leads people to believe that simply changing the nature of government will instantly make everything better. I have never believed that. I believe that it makes it possible to run things better,

but we shall deceive ourselves if we believe that simply by changing the structure of government in Scotland we shall cure the malaise that grips the whole of the United Kingdom. I, and the Liberals in general, hope—this is only a matter of hope—that to give the people responsibilities will release new energies and pride, and perhaps afford a greater capacity to tackle problems. One cannot go further than that.
We are in a situation in which there are many different points of view. There are those for independence who sit behind me; the federalists on these Liberal benches; the people who support the Government's proposals; those who support the lesser proposals advanced by the official Conservative Opposition; and the supporters of the status quo. There are all kinds of cross-winds throughout the argument. We have the view of the hon. Member for South Ayrshire (Mr. Sillars). Then there are the young Conservatives, who wish to go beyond the present Government's proposals. There are within both main parties people like the hon. Member for Glasgow, Hillhead (Mr. Galbraith) who do not want any change at all. There is the hon. Member for West Lothian (Mr. Dalyell), who has been dragged towards devolution but does not believe in it. I do not object to his not believing in it; I am just saying that it is a factor in all the cross-winds.

Mr. Tam Dalyell: Did not the hon. Gentleman play a prominent part in the Royal Commission which recommended the setting up of the regions? Has he not something to answer for?

Mr. Johnston: "Yes", is the short answer to that question. Incidentally, it was not true, as the hon. Member for Berwick and East Lothian suggested, that a two-tier structure was advanced simply because at that time there was to be no suggestion of a Parliament in Scotland. I remember that the Commission meeting under Lord Wheatley discussed this matter for a couple of days. We eventually decided—we may have been wrong—that the administrative structure of Scottish local government, which should be as efficient as possible, required to be reformed in just the same way whether one had the status quo, the Douglas-Home proposals, federalism or independence. We may have been wrong and


it is easy to look back and take a view now. If the idea of self-government had been a reality, a political possibility as opposed to a theory, we might have taken a different view.

Mr. Dempsey: Since the hon. Gentleman was a member of the Commission, does he believe that once the Assembly is elected it should consider seriously the reorganisation, once more, of local government in Scotland?

Mr. Johnston: That is a very broad question. I should have thought that the Assembly, as the Secretary of State for Scotland has said, will be entitled to consider it. Since the Assembly is not likely to exist until 1978 it would be unlikely to reach any conclusion on that matter until the mid-1980s—by which time we would have a fair idea how the local government system was working and would be in a better position to evaluate the situation more fairly than we are now. After all, local government reorganisation has been in operation only since May, and it is not fair to condemn it out of hand.
I believe that the Government have to consider certain matters again seriously. I would prefer them to establish some kind of constitutional conference to engage in direct contact between the parties in Scotland or in Wales, with a view to seeing whether one could hammer out a reasonable compromise. There is a grave danger of a scheme being introduced that will satisfy nobody and therefore cause resentment and bitterness.
First, the Government have got to give some consideration to the voting system. I find it incredible that that topic has been discussed hardly at all in this debate. Where is the logic in the Government, on the one hand, through the right hon. Gentleman the Secretary of State for Northern Ireland, doing their utmost to ensure that in Northern Ireland there is power sharing and that the minorities have some involvement in Government, and, on the other, trying to make sure that in an established Government in Scotland minorities do not have any say at all and are not involved in power sharing? It is all very well for the Under-Secretary of State for Scotland to shake his head, but if the system of government proposing two members per constituency is followed through there

will be a possibility of a large overall majority for a party that may receive only one-third of the votes. In Scotland at present the Labour Party has 36 per cent. of the vote and takes 57 per cent. of the seats. That is not fair, and cannot be justified. Certainly I should hate to see that degree of injustice doubled in the new system.

Mr. Harry Ewing: Even in the situation that the hon. Gentleman envisages the minorities will still be involved, because of the structure envisaged when the Scottish Assembly is set up—the Committee system married to the Cabinet system. While this is something that has been widely welcomed throughout Scotland, little has been said about it. With that system there is an absolute guarantee that whoever is in the minority, and no matter for how long they are in the minority, they will still be involved and have some say in the formulation of legislation before it reaches the Assembly.

Mr. Johnston: There is certainly some opportunity for the minority to play a part in the Government, if they are elected. They may well receive a lot of the votes but not be elected. That is What I am objecting to. We surely cannot set aside the unanimous recommendation of the Commission which considered the constitution, and not even talk about it. I do not understand how that can be justified. Neither the Prime Minister, during his hour-long speech, nor the Leader of the Opposition mentioned the subject, although I note that the Scottish Conservatives are now in favour of it. We well remember, when it was introduced in Ulster by the then Conservative Government, the posters that said that it was as simple as "1, 2, 3", yet the Leader of the House told us that it was all so complicated that people would not understand it.

Mr. Thorpe: Only Irish peasants can understand it—not the Scots!

Mr. Johnston: The second point concerns financial and economic powers. It is important to give such powers to the Assembly. There is a fairly large con-census that that should be done. The Kilbrandon Report proposed an Exchequer Board that would operate independently. The Government have insisted on the Treasury keeping tabs on


the situation through the proposed block grant. The weakness of the block grant system has already been pointed out. It enables the Treasury to maintain detailed control.
The proposal to surcharge the rates has been criticised by a number of hon. Members for the obvious reason that—apart from its being a tax of regressive unfairness, which we all hope Layfield will do away with—even if there were a 10 per cent. increase it would yield a sum of money equivalent only to about 2 per cent. of expenditure in Scotland. There must be found some way of introducing independent fund raising for the Assembly.
There are three options. The first is a fixed formula. This is better than a general grant. The fixed formula was the proposition we put to the Kilbrandon Commission in our additional evidence in the late 1960s. It was picked up by The Times in the recent article by Geoffrey Smith. This would give freedom for the allocation of money. There is the question of a share of the oil revenues. I know that they will last for only 20 or 30 years. I think there is a general feeling in Scotland, not confined to Liberals or nationalists—it was advocated by the Scottish Development Council on Industry—that some sort of direct receipt from this short-lived but valuable source of finance is desirable. It was a view that I was putting to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) in 1972, when he was giving me the classical Government objections.

Mr. Robin F. Cook: Will the hon. Gentleman not accept that the main difficulty with oil revenues is that they are paid by the consumer, and that the bulk of consumers will be English? Will it not be inequitable to seek to finance better services in Scotland by a tax raised mainly in England?

Mr. Johnston: I am not sure that I follow the hon. Gentleman's point. I would not have advocated it if I thought that it was unfair. The main objection advanced by a number of hon. Members, particularly Labour Members, to independent finance-raising powers is that they will interfere with the proper and fair distribution of regional develop-

ment. I consider that it would be right and proper in the first instance in a phased, federal situation, to leave regional development quite clearly with Westminster.
There is an innate contradiction in the Government's position. They are saying they will deny to Scotland the opportunity to do things in a different way, but when they are asked to be involved in the European Regional Fund and regional policy they make a great virtue of the fact that Britain is doing things its own way and not in conformity with common standards laid down in Brussels or elsewhere.
In conclusion then, I urge the Government to look again at the voting system, at economic and fiscal powers and the judicial review which my right hon. Friend the Member for Devon, North (Mr. Thorpe) mentioned yesterday.
It would be desirable to have some sort of consultative conference. Perhaps I could conclude by reminding the Secretary of State for Scotland of the words of one of his advisers, Mr. Gavin McCrone, who wrote in a book in 1969:
The Forces that give rise to nationalism are serious and must not be ignored. A large body of moderate opinion is dissatisfied with the existing institutional arrangements; to ignore this would be to invite support for extreme solutions. … If Gladstone had succeeded in his aim to create a federal state, the British Isles might yet be politically united. To grant responsibility has the effect of making people see where their true interests lie; to withhold it in the face of a strong moderate demand is to play into the hands of the extremists. It would be a tragedy indeed if Britain's mistakes over Ireland were to be repeated again in Scotland.

8.42 p.m.

Mr. Roderick MacFarquhar: It is perhaps a cruel and unnatural punishment for the British people and hon. Members that, less than a year after taking a fundamental decision to keep the United Kingdom in Europe, we are now faced with the even more fundamental question: "What is the United Kingdom?" That is the question which underlies this whole debate.
The Government's answer and the basis of the White Paper is a commitment to maintaining the integral unity of the United Kingdom. This is supported by the official Opposition and the other nation-wide party, the Liberals, with their


federal solution. However, this blanket commitment prevents the exploration of some possibly more fruitful forms of collaboration between the peoples of these islands within the increasingly important European context. With the European dimension in mind, the dissolution of the United Kingdom might not be so fearful a bogy as the tactics of the SNP in particular have induced the nation-wide parties to believe.
I have no sympathy with the official attitude of the SNP which seeks to foist a mean and jealous nationalism on a generous people. Their attitude to oil can be compared to the member of a winning pools syndicate who seeks to pull out and keep the winnings to himself. North Sea oil is the joint possession of all the peoples of the United Kingdom and must remain so whatever constitutional innovations we work out.
A principal reason for the Scottish Parliament agreeing to the Act of Union in 1707 was the desire to participate in the commercial exploitation of the English colonial empire. If the Scots are persuaded to leave the Union, again principally for commercial reasons, because they believe that the balance of economic advantage has shifted in favour of separation, the judgment of history on my countrymen will be harsh indeed. There are other, less ignoble, reasons for the peoples of these islands to want a greater say in the shaping of their own lives, as my right hon. Friend the Prime Minister indicated in opening this debate.
Insofar as the White Paper is a thoughtful attempt to satisfy the demands for greater participation in government in Scotland and Wales, I support it, though with some reservations. The problem is that I do not believe that it would work. Or rather, neither this system nor the Conservatives' alternative of a ping-pong parliamentary system would be allowed to work. I agree with what my hon. Friend the Member for West Lothian (Mr. Dalyell) said on the first day of this debate. The SNP will undoubtedly misuse the proposed Scottish Assembly, even if it were granted greater powers than are currently contemplated, in order to induce a mood of frustration among the Scottish people. They will seek to persuade the Scots that the Assembly is hamstrung and a charade and no doubt

they could evolve tactics to make it seem so.
I agree with the White Paper that as of now the Scots and the Welsh reject separation, but I do not believe that that attitude would continue in Scotland in the circumstances I have just outlined, even if the eloquence of my hon. Friend the Member for South Ayrshire (Mr. Sillars) continued to be advanced in favour of the Union. Nor do I believe that the Scots would be deterred from seeking separation by the warning note on oil in paragraph 98 of the White Paper. If that warning were to be taken seriously it would make nonsense of the Chancellor's willingness to borrow abroad and of the Government's attempt to obtain a separate seat at the energy conference. Nor would the cogent economic arguments advanced by the Prime Minister yesterday deter a people once they were determined to go for independence. We have enough historical evidence to support that view, and the hon. Member for Dundee, East (Mr. Wilson) confirmed it, too.
If the Scots, goaded on by the SNP, changed their views and voted into this House or into an Assembly in Scotland a majority of Members who favoured independence, would this House be able to reject their demand? If Scotland became independent, would Wales lag far behind? I think that my hon. Friend the Member for Bedwellty (Mr. Kinnock) indicated yesterday that although separatist emotions are currently at a low ebb in Wales, once the process of devolution starts, there, too, there would be no turning back. And even if we had held on in Ulster until then, would England alone continue to regard it as its duty to keep the peace in the Northern Irish Province of a rump United Kingdom? I think not. In short, devolution in Scotland is likely ultimately and inevitably to lead to independence in Scotland, and this in turn will lead to the dissolution of the United Kingdom into its component national groups.
Should we then draw back from the brink as my hon. Friend the hon. Member for West Lothian and many other hon. Members have advised in this debate? Like my right hon. Friend the Lord President, I consider that course to be politically impossible and liable to lead to the same result, if by a longer


and perhaps grimmer route. There can be no going back now, and it is therefore essential to ensure that the erosion of the United Kingdom works to the advantage of all the peoples of these islands and not just to the advantage of a minority among us.
What accounts for this erosion of the United Kingdom, for it already exists and prompts our debate and the measures which the Government are putting before us? First, the original economic, dynastic and security reasons for the Union of England and Scotland no longer have the force they once had. Second, and more important, post-war developments have destroyed much of the cement of nationalism, not just in Britain but throughout Western Europe. The diminution of centuries-old intra-European hostilities has had much to do with this, and the loss of the empires of Western European countries has also contributed to it.
The Scots could shrug off feelings of being the junior partner in the United Kingdom by donning the common habit of Britons engaged in a vast global imperial enterprise. Without this vast empire to be run, the Scots are again conscious of their distinctiveness and their minority position within the United Kingdom. By themselves such feelings would not be harmful, but they are compounded by the suspicions of neglect by London which, as Kilbrandon reported, are felt not only by the Scots and the Welsh but by people in many parts of England, especially those furthest from the capital.
The nationalist component has meant that devolution demands have been spearheaded in Scotland and Wales, but it is already clear that there will be early demands by English Members for a speedy follow-up in the English regions. Within Western Europe that phenomenon is not peculiar to Britain. Other EEC nations are experiencing the same fissiparous tendencies, for the justifications for national unity are disappearing there as here.
In Belgium the Flemish and the Walloons are continually at each other's throats. In Italy the regions are continually questioning the competence and relevance of the Government in Rome. The Germans were united for less than a

century before being divided under separate governments, and, of course, in West Germany government is divided on a federal basis. Even France, traditionally the most centralised of all the European countries, is facing nationalist separatist demands in Brittany, Corsica and other parts of the country. Spain, the most populous Western European country outside the EEC, faces similar demands from the Basques and Catalans.
In short, we in the United Kingdom need not feel inferior because we are facing centrifugal tendencies. What is crucial is that we who seem to be in the firing line of the problem should anticipate the dangers and deal with them on lines that may be conducive to greater European unity. I should like to suggest how that should be done.
First, the Government should think in terms of devolving power to all the regions of the United Kingdom equally though not necessarily simultaneously. Secondly, we should initiate discussions with our European partners to persuade them, where they are not already doing so or are not already convinced of the importance of doing so, to engage in the same process of devolution with the objective, thirdly, of constructing ultimately a political union of Europe based not on nation States but on regions, an idea which may seem novel to some hon. Members but which in the EEC countries is already being spoken of seriously. In these terms, and in such a European context, it would be possible to contemplate the dissolution of the United Kingdom with equanimity and even with hope.
In the immediate future, if such a prospect is outlined to the national parties—the Scots and the Welsh—on reflection, and remembering the result of the referendum, they may feel able to operate the currently proposed constitutional arrangements in a constructive manner as an interim step along the road to greater freedom within a European union.
By this route we could satisfy the demand for devolution and yet maintain the unity of our peoples within the wider political context. By this route we could satisfy any desire that may exist for nationhood without the construction of new nation States within either the United Kingdom or Europe. By this route, too,


we can perhaps kindle a new enthusiasm for Europe among younger people who have no time for the old nationalistic nation States but who see Europe as merely another bureaucratic tier imposed above them. They surely would welcome a European union which meant the elimination of the nation State and greater power to the regions.
This solution would also take care of the danger of the bureaucratic overload which has worried many hon. Members, including the Leader of the Opposition, and the President of France. By this route, if I may return home with caution and humility, might even lie a solution for the horrendous problem of Northern Ireland. What would be the purpose and justification of an IRA that wished to reunite Ulster with Ireland if Ireland itself had been dissolved into regions like Ulster?
In the debate there have been, and will be, many testimonies to the achievements of the peoples of these islands in fraternal unity. As someone who has spent all his working life in England but has a wider selection of Celtic blood—Scots, Welsh, Irish and Cornish—in his veins than has even my hon. Friend the Member for Bedwellty, I share these deep emotions, and I, too, would grieve at the dissolution of the United Kingdom if it were to no purpose. We have to utilise these deep emotions while they still exist and use them to forge a new kind of unity in these islands and within Europe. We must devolve and unite—devolve in the United Kingdom and unite in Europe.

8.58 p.m.

Mr. Peter Mills: I welcome this opportunity of speaking on this important subject, "Our Changing Democracy". The White Paper is entitled "Devolution to Scotland and Wales". My complaint is that it does not include Northern Ireland and England. We start off on the wrong foot by not looking at the United Kingdom as a whole. I would have hoped that perhaps the White Paper could be delayed until the other parts of the United Kingdom had been considered. I do not believe, therefore, that the Government are starting in the right way.
I have read the White Paper carefully, and I think that what I have to say reflects the views of some of the people in the South-West of England, as I have

taken the trouble to consult some of them.
I do not think that the White Paper is the answer. The very word "devolution distresses me. The word that I can accept—I hope that others will accept if they look at the problem dispassionately—is "decentralisation". This I can support. What worries me is that devolution is not the end of the road. The militants will go on and on and on until finally they get what I believe they want—separation. This is something that I cannot accept.
One can understand some of the frustrations of Scotland and other regions, but I believe that what they need is further decentralisation from Whitehall, quicker decisions in Whitehall, better understanding of their problems, and a little more sensitivity to their needs and their difficulties. This does not apply only to Scotland. It applies to the South-West and to other regions. We all feel irritated sometimes by the decisions made in Whitehall.
Some of my friends on the Conservative side have said that they do not want more government, but I believe that these proposals will mean even more government. They will increase Government activity and will eventually increase the costs.
The word "devolution" goes against the trends of our time. The movement of getting into Europe is a good example. The tide seems to be working towards bigger units, which we need to deal with even bigger more threatening units elsewhere in the world. Surely now is the time to work even more closely together in view of our economic problems and the world problems that assail us.
I find it difficult to believe that any part of the body can work completely independently, and I believe that in the United Kingdom we are one body. We must look at the effects of the White Paper on the rest of the United Kingdom. This obviously concerns people in the South-West of England. If this trend continues we shall have trouble with the Cornish, and one knows only too well how they view these matters.
I believe that grave economic dangers lie ahead of us. If we do not share our problems, carry our burdens together, and share and enjoy our prosperity


together as a nation, there will not be very much future for the United Kingdom.
In Scotland and in other regions we can see unfairness and neglect in certain areas, and these must be rectified. But the principle of sharing prosperity and sharing problems is very important and only a united Kingdom can do this.
I come to the attitude of the Scottish National Party, which disturbs me deeply. I have watched its Members over a number of years in this House and it seems extraordinary how they have virtually nothing to say about the remainder of the United Kingdom. They operate on only a very narrow front. They are very selfish in their attitude. It was my hope that they would have a much wider vision and realise that we stood or fell together.
Some of us have been concerned about and have cared for another part of the United Kingdom, namely Northern Ireland. We have realised that decisions that we have made over there would not be popular in the constituencies that we represent or in England as a whole. But we cared and we went ahead because we thought it right for Northern Ireland in that situation and those circumstances. I hope that SNP Members will think a little in that way as well and show some concern for the whole of the United Kingdom and all its citizens. I make a plea to them not to go on stoking up the fires. It is so easy for a politician to do that. Nationalism and devolution sound so easy to proclaim and obtain, but all of us know that we cannot carry out all that we say or want. With their present tactics, I believe that SNP Members will reap a harvest that they will regret. It is cruel and highly dangerous to continue in this manner.
I want to say a few words about Northern Ireland, which we must remember is part of the United Kingdom and cannot be left out of our discussion of this subject. Perhaps we can all learn from the mistakes over there. Although it is difficult, we have to try to accept that Northern Ireland is a very special case. For the time being, normal majority rule cannot be accepted. Mistakes and lost opportunities have brought about this situation. But we cannot go back to the old Stormont. In my view a form of power-sharing or a coalition of committees must be tried once again.
Unfortunately, I failed to catch the eye of Mr. Speaker during Monday's debate, but what I say now is well within the terms of the subject-matter of today's discussion. The message that I want to give the Minister and the Government is that if all else fails in Northern Ireland, integration is the only answer, however unpleasant. It is part of the United Kingdom, and there will have to be more Members from Northern Ireland in this House, with all the difficulties that may result. These matters have to be considered, and I hope that the Government have plans to deal with the situation if it should come about. I hope that they have a fallback position—in other words, devolution in reverse. Because of the difficulties in Northern Ireland, this may well have to happen.
I am not normally a pessimist, but I believe that the situation in Northern Ireland is so serious that unless the Government have plans ready and the House is prepared to accept them, the situation could deteriorate even more. I hope that the Secretary of State for Northern Ireland will read my words on this subject, because in my view the position is so serious that some plans have to be drawn up now.
I conclude my remarks by saying that there is no better future for this country than a united country—a united United Kingdom. This in my view can come about only by strengthening our ties and working more closely together. If we wish to safeguard the United Kingdom—and of course some do not—we must sit down together and work out ways in which the United Kingdom can be invested with new vitality and how recent obstacles can be overcome. That is the only way forward. The White Paper, in my view, does not help bring about these aims which I support so strongly.

9.6 p.m.

Mr. Harry Gourlay: I will not follow the hon. Member for Devon, West (Mr. Mills) in his remarks about Northern Ireland but I agree with his comments on the United Kingdom and with what he said about the Scottish National Party. I was disturbed with several of the contributions made by some of my hon. Friends who do not seem to share the Government's views on the White Paper.
I welcome the White Paper and give it my general support because it is based on devolving power to the people of Scotland without destroying the economic and political unity of the United Kingdom. Complete separation from Westminster is about as welcome in Scotland as a defeat from England on the green field of Hampden. This is why the SNP prefer to use the less volatile word "independence" and why they become so upset when their policy is referred to as separation. They intensely dislike the natural consequences of a separate currency and different excise duties, which would involve customs posts on the border between Scotland and England—even the leader of the SNP admitted that yesterday in the House—with Scottish passports being required to enable Scots to visit relatives in England and vice versa. The SNP propaganda for separation is based on an appeal to envy and greed. We see their posters showing his oil, her oil, your oil. It is not England's oil, they say.
In their last political broadcast, they had to invent an old-age pensioner by taking one of their retired business colleagues and putting him on television to represent the hard-up and hard-done-by Scottish pensioner. They could not find an ordinary working-class person to defend their policies.
What if England found oil on her shores along with the gas already being consumed in Scotland, and announced the break-up of the United Kingdom to avoid sharing the benefits with Scotland? Would separation be so attractive then, or if the Shetlands were to opt out of any future Scottish State because they have tremendous amounts of oil?
We reject the SNP philosophy that North Sea oil should be used to divide the working people of the United Kingdom. Their policy of grabbing all the oil is both immoral and selfish. It is totally alien to the best traditions, values and character of the Scottish people. The philosophy of Scotland's famous son, Rabbie Burns, as contained in the well-known line:
Man's inhumanity to man makes countless thousands mourn
has been completely lost on the fanatics of the Scottish National Party.
In fact, if the ownership of North Sea oil were determined by geographical affinity, it would completely destroy the

SNP's case because the oil deposits east of Shetland are much more important in size and value than the oil fields to the east of Scotland. Were Shetland to declare UDI, where would Scotland be under the Scottish nationalists? If separation took place, the median line determining the ownership of the deposits would indicate that the Auk, Argyll and Josephine fields would be within the English sector.
Again, the Scottish nationalists are completely misleading the Scottish people. To grab all the oil for Scotland would seriously damage our trading relationships with our nearest neighbours. Scotland cannot risk the gamble of making itself solely dependent on oil.
The White Paper is appropriately named "Our Changing Democracy", but I refute the claim by some hon. Members on both sides of the House that this is the slippery slope to separatism. I would caution those hon. Members who believe that to refuse the Scottish people this form of devolution will see the continuance of our present system. My hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), in an admirable speech, spelt out the consequences of not giving Scotland the kind of devolution envisaged in the White Paper. It was the late President John F. Kennedy who said, when trying to improve conditions in America, that those who prevent peaceful devolution will be responsible for violent revolution.
One point in the White Paper to which I wish to refer concerns the composition of the Executive. So far in the debate—and I have heard most of it—no one has referred to this aspect. I object to the proposals in paragraphs 45 and 46 in which it is stated that members of the Executive need not be elected Members of the Assembly. To me, this contradicts the title of the White Paper, "Our Changing Democracy". What is required is more democracy rather than less, and we can do this by having health boards and various other statutory bodies in Scotland comprised of elected rather than appointed members. There is already too much patronage at the disposal of the Secretary of State without introducing more in the new Assembly.

Mr. Gerry Fowler: Perhaps I can clear up that point at once. I am sure that the White Paper makes clear that we


would make provisions for those special circumstances where a man of particular qualifications was not to be found in the Assembly. This is conspicuously the case in matters of law if, for example, the Solicitor-General for Scotland were not a Member.

Mr. Gourlay: I accept that theory and I have noted the remarks in the White Paper, but in this House we have had the situation in which a Scottish Standing Committee has been discussing legal matters and has been able to have in attendance one of the Law Officers although he was not a Member of this House. I would have no objection, in legal questions, to a qualified person being appointed by the Assembly purely for that purpose, but I should not want to regard him as a member of the Executive. The membership of the Executive ought to be drawn from the elected Members. I cannot back down from that view because I feel strongly on the democratic aspect. I recognise, however, that there could be difficulty in the initial stages, in which we might have an Assembly with. out a great many experienced people, but that could be overcome by utilising the services of civil servants and persons with special qualifications for that purpose rather than making them members of the Executive.
I turn to the question of finance. The tax raising power of the Assembly is another problem very difficult of solution. While a surcharge on rates would be practicable, it has many disadvantages, and I hope that some alternative financial scheme can be evolved before the Assembly is formed. The block grant for the bulk of the Assembly's expenditure has some merit, but I would like an additional fund-raising power to be devised, whether it be a percentage of value added tax or of the road fund licence or a hotel tax such as that which one finds on the Continent. Although the present suggestion may be necessary in the original set-up of the Assembly, I hope that, within the next few years, better financial arrangements can be devised.
I want to refer also to paragraph 76 of the White Paper, which refers to the committee system being suggested. My

hon. Friend the Under-Secretary of State for Scotland intervened in the speech of the hon. Member for Inverness (Mr. Johnston) to draw attention to the fact that the committee system which is being suggested for the Assembly is quite unique. All the minority parties will take part in the committee system and therefore they will have the opportunity to help to frame the legislation and to advise the Executive about some of their powers. That is an opportunity which all hon. Members in this House, especially Back Benchers, would very much welcome. Therefore. I hope that when the Bill comes before the House the matter will be agreed without much difficulty.
My right hon. Friend the Lord President said that he hoped that the Bill would finally receive the Royal Assent before the end of the next parliamentary Session. He said that the earliest elections for the Assembly could be either late 1977 or early 1978.
I am convinced that the upturn of this country's economy will be such that this Government will be in power for some time to come. Therefore, I plead with my right hon. Friend the Secretary of State to ensure that we have the elections for the new Assembly in Edinburgh before the next General Election. It would be entirely wrong to have the elections for the Assembly coinciding with a General Election. It would also be wrong to have the elections for the Assembly coinciding with either the district or the regional elections in Scotland. Those elections should be held at a completely separate time and early 1978 would certainly be a suitable time for them. I hope that my right hon. Friend will take note of these points and press them forward in the Cabinet.
In view of the time factor I shall draw my speech to a conclusion. In the main I support the propositions which are set out in the White Paper, with the minor reservations which I have already stated. I hope that the House will endorse the White Paper and that the Government will seek to introduce a Bill with the necessary improvements which will give Scotland a new dimension within the United Kingdom—an improved and worthwhile form of democracy.

9.17 p.m.

Sir John Gilmour: I find it impossible to believe that we can proceed to efficient and economic devolving of power from Westminster to other parts of the United Kingdom before we closely examine our own procedures and position in this House.
I do not believe that at present many hon. Members are satisfied with the workings of this House. In recent years we have been going through an economic crisis when hon. Members on both sides, whether in Government or Opposition, whether Ministers or otherwise, have been exhorting people to rationalise and to cut down their overheads and expenses and to become more competitive and more efficient. During that time I have taken the view that nothing has been done to improve the position here. Therefore, I suggest that the first thing we should do is to declare a quarter of our Members redundant. Perhaps I may take this opportunity to say that I shall not seek re-election. However, in all seriousness—I see that two of my colleagues from the region of Fife are present in the Chamber, the hon. Member for Dunfermline (Mr. Hunter) and the hon. Member for Kirkcaldy (Mr. Gourlay)—there are four Members representing Fife and I am quite convinced that three of us could do the job perfectly well.

Mr. Gourlay: Our three.

Sir J. Gilmour: That is a debatable point. From my experience I believe that three of us could do the job. If that principle were carried through, even if we allowed Orkney and Shetland and the Outer Hebrides, as smaller constituencies, to keep their Members, there would be a Scottish membership of about 49 or 50 Members. If we did the same thing in England on the same proportion there would be about 470 Members. I believe that we should then find that we could go about devolving the powers with much better purpose than if we just left this place as it is at present.

Mr. John Parker: How would the hon. Member staff all the Committees of the House? We cannot do it now.

Sir J. Gilmour: In many cases the Committees of this House have been too large in the past, and we have passed

far too many Bills, anyway. Therefore, if we could not staff the Committees we would not have so many Bills, and I am sure that all our constituents would be absolutely delighted.
That leads to what I feel is one of the greatest weaknesses in the White Paper. It is suggested that we should devolve part of the responsibilities of 71 Scottish Members to 142 Assembly Members in Edinburgh. I cannot go to my constituents and say that part of my work must now be done by two other people and that they must pay them to do it. I do not believe that anyone could go to his constituents and say that that is what they must do. Therefore, while I am not against the devolving of powers, I believe that we must first take the House of Commons by the scruff of the neck, so to speak, and get it right before devolving power to any other part of the United Kingdom. If we do that, we shall have some hope of reaching a successsful solution.
Before concentrating on how that should be done, I think that we should get a closer idea of why people in Scotland and Wales are dissatisfied. I do not believe that they are basically dissatisfied with the laws that we pass. For example, the whole of the work on the Local Government (Scotland) Act, which has come in for a lot of criticism, was conducted in Committee by Scottish Members. With the exception of a few amendments on Report, we can safely say that the bulk of the work on the framing of that legislation was carried out by Scottish Members in London. It may be argued that if we had had devolution before that measure went through, the legislation would have been in a different form, but I think that many of the answers would have been the same as they were here.
What are people dissatisfied about? I think they are dissatisfied with administrative decisions and compromises arrived at in Cabinet meetings and committees—for instance, the decision to put half the expansion of the steel industry in Wales and the other half in Scotland. I do not believe that the decision to set up a Rootes car factory in Linwood was in the best possible interests of a viable motor car industry. Such decisions annoy people in Scotland. They are also


annoyed by the frustrations of administration. I get more letters about the shortcomings of the administration of local authorities than about the spending of millions of pounds voted by this House.
I believe that the measure of devolution which will satisfy the Scottish people is likely to be one which gives them closer contact with matters which directly affect them in their daily lives. I see no reason why we should not be able to devolve many more powers absolutely to the Scottish Assembly and keep very little here, except the overriding right of veto at the end of the day.
I could bring out many other points about the White Paper, but time is short and others wish to speak. The cardinal point which we should get at straight away is that, before devolving powers away from Westminster, we should make certain that we do not leave it in a vacuum which people will not accept. We ought to try to get matters right at Westminster first.

9.23 p.m.

Mr. John Parker: I was interested to hear what the Leader of the Scottish National Party and my hon. Friend the Member for South Ayrshire (Mr. Sillars) said when trying to distinguish between separation and independence. To my mind, those two words mean the same thing. Therefore, I shall consider the Scottish National Party—the "Nats" as they like to call themselves—as a separatist party, which will be satisfied only by having complete independence and separation from the United Kingdom.

Mr. Andrew Welsh: rose—

Mr. Parker: I shall not give way, because many other Members wish to speak.
What does the Scottish National Party stand for? I tried to find out by reading its election manifestos and by reading the speeches made by their spokesmen on all the main subjects that have come up since they first had a large representation in this House in February 1974.
I also read an article in the Scotsman, which tried to find out the views of SNP members on various subjects. It is difficult to find out what are their

views. They promised everything to everybody. Everything was to be paid for by North Sea oil. That was the whole basis of their electoral campaigns.
When they were asked what their philosophy was, they said that they believed in "social democracy." What did they mean by that? It so happens that the Scotsman asked each member of the SNP what he meant by social democracy. Nearly all the remarks were naive, but very little, apart from clichés, was said about the matter at all.
One or two of the comments were quite interesting. One SNP member said that he believed in a
commonsense middle of the road policy without recourse to outmoded positions of Right or Left.
That was what this policy meant to him. The Leader of the SNP said:
I do not believe in planning for more than two years ahead.
That is what the policy meant to him. The hon. Member for Argyll (Mr. MacCormick) said:
In a sense the way Britain is run at present—acceptance of there being a public and private sector. A great deal is done through our social services, but freedom and opportunity are given to each individual without unnecessary State control over him. That is what I believe in.
If we have that now, what is the point of having a Scottish National Party to try to implement that? That is the policy in which its members say they believe.
Why do members of the SNP want separation? There has always been a considerable element in Scotland in favour of separation. The Jacobites were reactionary. They were much more akin in their views to the SNP than the SNP are to the Jacobins.
One has only to look at the views that they put forward from time to time to see that SNP members are naive in their whole approach to economic affairs. When the question of Linwood came up, the SNP spokesman on economic affairs said:
Linwood should be made, with Bathgate, a centre of the Scottish Motor Corporation, financed by three days' money from North Sea oil.
The price of North Sea oil in this country and in the whole of the Western world will depend on the high price that


oil reaches now. That is the only thing that makes North Sea oil viable. The fact that petrol is so expensive means that we have over-capacity for the production of cars in this country and throughout the Western world. Another member of the SNP, while serving on a Select Committee, said that we had 25 per cent. excess capacity for motor car manufacturing in this island.
If a motor car corporation in Scotland is to be paid for out of the proceeds from North Sea oil, where will it sell the cars? Will the cars be sold south of the border? Will there be a barrier to separate the two countries? Will cars from England and from the Continent be excluded? Would there not be a very small market for cars in Scotland? A Scottish motor car corporation is a nonviable thing to start with, because it depends on getting a high price for oil, and if there is a high price for oil one cannot sell a large number of cars.
There is a need to reduce car production thoughout the whole of the Western world during the next 10 years, and certainly that must be so in this island. Therefore, to start with the idea of having a Scottish motor car corporation is naive and is out before one can start to argue the matter at all. So much for the SNP's argument about Chrysler.
What arguments do the members of the Scottish National Party put forward to deal with the economic situation in Scotland? What new industries or activities do they suggest to employ people there? I have not heard a single suggestion from them.
They have a vague idea about improving agriculture and forestry. If Scotland has shown anything to the world it is that it has a successful farming community. They have beef, the malt to make whisky, good fruit around Dundee, and so on. But all the good ground that can be used for agriculture in Scotland is already used. Scottish farmers come to England and run farms better than do many English people. There is no room for a large expansion of agriculture in Scotland.
There could be expansion in forestry, but the Scottish National Party has done nothing about trying to double production there. Perhaps it is because there are no forests in the Western Isles. World-

wide, there will be a big shortage of timber. The resources of Siberia and Northern Canada will take over 100 years to grow again when cut down, but on the West Coast of these islands, particularly the West and South-West of Scotland, are the best areas in the world for growing timber. We should be planting twice what we are planting now. Why is the Scottish National Party not fighting the Treasury for money for this purpose? That would be of benefit in the short run because of the timber and in the long run in the use of the forests for subsidiary industries. Timber is an expensive product, and if we produce it here we can avoid importing it. That is what we should be doing. But the SNP says not a word about that big opportunity.
The BBC's most recent figures show that its total revenue last year in Scotland was £13 million, while the cost of providing services was £17 million, in both cases after alocating a fair share for central costs and taking account of the transmission to remote parts of the country. I have no objection to that, but one has to understand that this is a British service, from which the Scots benefit.
We are told that Scotland has gained nothing from the United Kingdom connection in recent years. There would have been no atomic reactor at Dounreay if the Westminster Government had not created it. The hon. Member for Dundee, East (Mr. Wilson) has pressed the Government to establish the headquarters of the British National Oil Corporation on Tayside. If that is done, does he suggest that an independent Scotland would cut off the English and Welsh operations and leave the Corporation to look after only the Scottish portion of the oil industry? Many of us were anxious that the Forestry Commission headquarters should be in Scotland. That would be quite right, but would the SNP propose that it withdraw from control of English and Welsh forests and operate as a separate corporation? A large number of British Departments have a large part of their staff now in Glasgow and elsewhere in Scotland. Are they to be sent back to England, or are only the Scottish operations to be kept?
The Scots cannot get away from geography. They keep saying that they would like to be part of Scandinavia.


They are not Scandinavian. They cannot be part of Scandinavia. They are part of this small island, which they share with England and Wales. They cannot get away from that fact. Secondly, they cannot get away from history. The Industrial Revolution took place in Scotland, Wales and England at the same time. It particularly took place in Scotland. It was the Scots who built the slums of Glasgow and it is Scotsmen who have collected their rents from the people in Scotland.
Wealthy Scottish merchants did very well from building up the shipbuilding industry and other industries in Scotland. Hon. Members should look at the cemeteries of Glasgow and Edinburgh. Some of the finest classical monuments in Europe are to be found in those cemeteries. Between 1780 and 1840 wealthy Scottish merchants spent enormous sums in putting up these tombstones which should be shown as a tourist attraction. The old industries of the nineteenth century began to decay at the beginning of this century. It is up to all of us now to clear up the mess than has been left by the Industrial Revolution. We must work together.
It has been suggested that we should Balkanise this country and break it up into small states. Some people want a separate Cornwall, Wessex and East Anglia. That is a ridiculous suggestion. If there is to be Balkanisation, the Scots will suffer most, because Shetland will declare independence, become a separate unit and run its own affairs.
I am generally in favour of the White Paper. The economic unity of this island must be retained. I turn to the results of steps taken towards devolution in other countries. Yugoslavia is a good example of what happened when complete economic devolution took place. It comprises six different States, three of which each set up a factory that could produce all the transistor radios needed for the whole of the union. That is the sort of thing that will happen here if there is an economic break-up in the United Kingdom.
There must be someone in control. In Yugoslavia, control has been given to the central bank. We do not want that to happen here. It is much better for

the Parliament at Westminster to control economic affairs. All the nominated bodies in Wales and Scotland should be under the control of their respective Assemblies. The general control of economic affairs must remain in the hands of the Westminster Government if we are to retain unity.
I have some reservations on some matters, particularly financial matters, but I hope that the House will vote in favour of the White Paper.

9.40 p.m.

Mr. Arthur Jones: I want to look at the devolution proposals in the context of the situation in England and the consequences there would be for England if the devolution proposed in the White Paper were followed, and certainly the much graver situation which would develop if those who have ambitions beyond the White Paper—I refer to the Scottish nationalists—had their way.
The debate on devolution from Whitehall and Westminster has continued for many years, essentially in the context of a shift of power from Parliament to democratically elected local and regional authorities. This applied essentially to England and Wales, and many of us have had an opportunity of considering the implications of this for a number of years.
To my mind, it was always a question of why, in considering the reorganisation of local government in England and Wales, we did not look at the financial significance of those alterations. In fact, nothing was done to convey the readiness there appeared to be with regard to passing wider administrative responsibilities to locally elected authorities. The often questioned and deliberate exclusion of financial considerations from the terms of reference for the Royal Commission on Local Government Reform by the late Dick Crossman was the limiting factor. Many of us questioned why we did not include the financial considerations for local government reform in England. The special circumstances in Ulster, to which reference has been made on a number of occasions in the debate, are in no way within the context of our considerations today.
The hon. Member for Dagenham (Mr. Parker) has clearly done his homework very thoroughly. He took us across a wide spectrum of the considerations, with


particular regard to Scotland, clearly reflecting that our debate today arises essentially from the political motivation in Scotland manifest in the political approach of those who wish, as I understand it, to see an independent State north of the border. That is the great factor that has given rise to the White Paper and the debate. Those who act as its advocates appear to be prepared, in the fulfilment of their objectives, to accept the destruction of the United Kingdom, a political entity which has seen us through a period of some 200 years under the sovereignty of our Parliament here at Westminster. I very much welcome the references made during the debate to that aspect.
I believe that the continued unity of the four constituent parts of the United Kingdom is an essential for the future security and well-being of all our communities, and any proposals for devolution should have that as the corner stone. I therefore welcome the Government's statement in paragraph 15 of the White Paper that in their proposals
The Government have observed the principles which flow from acceptance of the essential unity of the United Kingdom.
The political appetite displayed by those committed to the cause of Scottish nationalism can never, in my judgment, be satiated by proposals which are based upon the overall community interest of the United Kingdom as a whole. I believe that if we give them a slice, they will demand the cake, and that nothing less will do. That, essentially, is the danger of the Government's proposals for devolution to Scotland and Wales.
It is beyond the wisdom of mortals to see the inescapable consequences that must flow from the policies to which those who seek independence are committed. The responsibility for that careful appreciation and balanced judgment lies with the present Government, upon whom an awful responsibility rests in terms of the United Kingdom's interests.
I am amazed that Ministers should attempt a reform of this magnitude without making some attempt to obtain a measure of agreement on the ultimate objectives. I listened carefully to the right hon. Gentleman the Leader of the House on this score. He said that his proposals were to be discussed and debated. Much

debate and a certain amount of decision taking should have taken place before we were given definitive proposals in the White Paper. Clearly, these discussions should have taken place with those on whom public debate and responsibility for decision rests.
With the precedent of the EEC referendum behind us, and in the context of the divided opinions expressed in this debate, it is difficult to see how the advice to consult the people by means of a referendum can be resisted. I am sure that we may well find ourselves drawn into the situation of having to assess not political judgment in this House and elsewhere but opinions in the communities.
I quote from Part VII, paragraph 293 of the White Paper; under the heading, "What Scottish and Welsh devolution will mean for the United Kingdom". The text includes the statement:
The essential political and economic unity of the United Kingdom has the corollary that what happens to the part must be of concern to the whole.
This is where the Government's proposals fall short. They in no way deal with the consequences for this House or for England. It is a desperate shortcoming in the Government's proposals.
The subjective observations in paragraph 296 of the White Paper do nothing to support the basic assurance that the
deep sense of allegiance to the United Kingdom will not be harmed.
I believe that political activity could destroy the concept of that deep sense of allegiance to the United Kingdom. The evidence is to be found in Ulster. We could see severe developments in that regard.
There is throughout the White Paper no recognition of the fundamental changes which the Government proposals would mean for Parliament and the administrative effects of the devolutionary arrangements proposed, already demonstrably unacceptable to Scottish nationalism.
The debate and consultations initiated by the present Government formally started with the publication of the White Paper "Devolution within the United Kingdom" presented on 3rd June 1974, the basis of which was a summary of the Report and Memorandum of


Dissent of the Royal Commission on the Constitution, October 1973, Cmnd. 5460.
In my opinion, an initial error of judgment arises in paragraph 1 of the introduction to the White Paper:
It is in Scotland and Wales that the need for consultation arises most immediately …".
That is a quotation from a statement made by the right hon. Gentleman the Prime Minister, recorded in the Official Report of 19th March 1974. Regionalism in England formed a significant rôle in the recommendations of the Royal Commission which were notably absent from the later statement in Cmnd. 5732 of September 1974 which dealt essentially with the proposals for Scotland and Wales.
The Government's proposals are also clearly defective in their omission to deal in any positive way with the effects of their proposals on Parliament at Westminster and Government in England and Wales. I am confident that this arises from the electoral considerations in Scotland in the last year or two.
The subject of regionalism in England has been an important part of the debate on devolution for many years. There were references during the debate last February to the devolution proposals and the question of regional government in England. Although a minor part of the present debate, the issue is central to any reform, and my criticism of the Government is that for practical purposes the question is apparently ignored, despite the commitment of the Socialist Party, through many of its spokesmen, to a form of regional government in England. This has formed part of Socialist thinking for many years.
Devolution was originally discussed in a Fabian paper in, I think, 1903. Is regionalism in England to be pleaded by the Socialists because of their commitment to devolution for Scotland and Wales? Its advocates appear to see some similarity between independence for Scotland and Wales and independent regionalism in England. There is surely no common ground here and no justification for any overall approach to two quite dissimilar and totally unrelated propositions. We have to consider not the effect in regional terms in England but the effect that this will have on the compo-

sition and powers of this House and the effect it will have on local government and the economic scene in England.
The economic and political justification for regionalism in England has, in my view, never been made. The problems in terms of elected members and executive arrangements have never been fully considered. It is not surprising that the Labour Party in its document "Devolution and Regional Government in England" published last September came to the conclusion on page 20 that
it would be irresponsible for the Labour Party to express an intention of introducing regional authorities within the next decade.
The question of regionalism in England has never been considered, on that recommendation. It is being ignored now in terms of the White Paper. The Government's proposals, because of this shortcoming, are devoid of reality in political terms, untenable in their administrative proposals and unacceptable to the majority of the United Kingdom. They should be rejected.

Several Hon Members: rose—

Mr. Speaker: Order. We have about 25 minutes before the Minister is to reply. May we have several short speeches?

9.53 p.m.

Mr. Robert Hughes: Whatever else may be said about the discussions that have taken place so far, it is clear that it has come as a profound shock to many hon. Members to realise that the Government did mean what they said when they told us that they were producing devolution proposals that they intended to carry through. Many hon. Members have discussed not the White Paper but the principle of devolution, and whether we wanted devolution. That is a debate that ought to have taken place a year ago. A lot of people must have thought that it was just paper talk and that nothing would be done.
Where do we start with a debate like this? It is difficult. I listened yesterday to the speech of the hon. Member for Western Isles (Mr. Stewart), the Leader of the Scottish National Party, with growing astonishment. It was what might be described as a low profile speech. The hon. Gentleman ended by saying that he and his party supported the White Paper. I could not believe my ears. I did not even believe it when I saw it reported in


the newspapers this morning. So I checked Hansard to make certain that it was there. There it was:
We support the White Paper."—[Official Report, 13th January 1976; Vol. 903, c. 263.]
The hon. Gentleman went on to say that there were certain reservations. Yet his hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Reid) said on television when the White Paper was introduced—if I remember correctly—that he had expected to be disappointed but he had not expected Scotland to be insulted. Yet the hon. Member for Western Isles says:
We support the White Paper.
That is quite an astonishing turn-around.

Mr. Donald Stewart: Do you want us to vote against it?

Mr. Hughes: Yes, I do. I shall tell the hon. Gentleman why. A couple of days after the White Paper was introduced the Chief Whip of the SNP appeared on television saying that the White Paper was so bad that there would be a grand coalition of all the Opposition parties so that this pernicious Government would be brought down as quickly as possible. Yet I read again that the Scottish National Party supports the White Paper.
Why has there been this astonishing turnabout? I believe it is because they have suddenly realised that the White Paper proposals represent a significant and important devolution to Scotland. Three-fifths of identifiable public expenditure in Scotland will be under the direct control of the Assembly, and the Executive, and the Assembly will also have revenue-raising powers. One may disagree with the methods of raising finance in addition to the block grant, but the additional powers are there. This is an important piece of information in the document, but SNP members have said little about it.
I wonder whether another reason for the intention of SNP members to support the White Paper is that they see it as a source of conflict. A number of hon. Members have already mentioned the possibility of conflict, though most of them have seen it arising as a natural dissatisfaction of the people of Scotland and Wales with the organs of government and devolution. They have likened

it to the continuing conflict over finance between local authorities and the Government, and have seen the conflict as being perpetual and natural.
I believe that the SNP deliberately wants to foster conflict. The only people who can lose by conflict are the ordinary people of Scotland, Wales and England.
I am sometimes surprised when I read beguiling articles, especially in the Scottish Press, saying that one of the reasons why the White Paper had such a bad reception was that it did not include any economic powers. The expenditure of three-fifths of identifiable public expenditure is, I would have thought, a considerable economic power. However, leaving that aside, when I turn the pages of Scottish newspapers I find that the same people who are demanding economic powers for the Assembly want to deny economic powers to the British Government. They want to see the economies of Scotland, England, Wales and Ireland set free. They do not want control over the economy at all. They want to stem the advance of Socialism.
I regret that some of my hon. Friends, from their speeches, seem to have been mesmerised by the institutions of government, the trappings of power and the sort of Assembly that we shall have. What is more important is the power that these institutions will have to control the economy of the country for the benefit of the people.
I can understand why some people have a romantic vision of a Scotland long past—a Scotland which, in my belief, never existed. They have a romantic vison of the time before the Union, when the lion sat down with the lamb and there was no exploitation in Scotland. They believe that if only we can break up the Union, the golden age of that idyllic Scotland will return and that the people who built the slums and exploited the workers will disappear when Scotland achieves independence. It is utter nonsense.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed without Question put.

Ordered,
That the Motion in the name of the Prime Minister for the Adjournment of the House may be proceeded with at this day's sitting, though opposed, until Eleven o'clock.—[Mr. John Ellis.]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

Mr. Hughes: In different parts of the world there is the feeling that the organs of Government have failed the people. The situation is expressed dramatically in the Indian sub-continent. There was the division, first, into India and Pakistan, and then the further division of Bangladesh. The same sort of divisions are appearing among the people of Cyprus. All the time the reasons for these divisions have been fostered and given a false nationalism with the feeling that if only the people have some form of government in their own hands all their problemhs will disappear. That neglects the fact that the real problems are problems of the economy.
It is necessary to have stability of government. One of the reasons why I want the SNP to vote against devolution is so that its members can be honest for once. I want them to tell us that they are against devolution—because they are. It is curious that they told the people of Scotland that the time of decision is now, that it is time for self-government, but that now the White Paper is published they say "Not yet; your problems are desperate but we can wait another 10 years for the Scottish Assembly to work and after a few years we shall eventually have independence." They are being dishonest by pretending that when they say it is Scottish oil they are not being greedy and selfish. They are being dishonest when they say that their belief in independence is not a belief in separatism. They are being extremely dishonest to their Welsh nationalist colleagues. I sometimes read in the paper, with a sense of nausea, that the SNP has sent fraternal delegates to Plaid Cymru's annual meetings. There they stand, shoulder to shoulder, expressing Celtic solidarity—

Dr. M. S. Miller: In English!

Mr. Hughes: —to free themselves from the yoke of English imperialism. Yet, almost in the same breath, they say "Watch it, it is Scottish oil and not one Welshman will benefit from one halpenny of Scottish oil." That is how far their solidarity goes. I wish they would express their beliefs openly and honestly.
I am in favour of the decentralisation of power and the Government's proposals. There are risks involved. If there are to be differences between Scotland and England over the way in which the Assemblies tackle their respective tasks, we shall have to wear those differences. If the Scottish Assembly decides that it wants to spend more on education than on health, or more on the arts than on education, there must be no more buck passing—no more saying that it is all the fault of London.
It is strange that one of the reasons for differences between Scotland and England is that, in a sense, we have not had full union. We have always retained our own Scottish legal system, our own education system and our own Scottish health service, organised in a different way.
One benefit that devolution can bring is flexibility of approach, producing different ideas and other differences, and these we have to wear. At the same time, we must have stability. We cannot, over the next 20 years, continually argue whether the constitution is right. I do not suggest that there will never be changes in a devolved Assembly; there are bound to be some. But we have to set the pattern for a long time ahead. We cannot be constantly changing.
If I thought that we could solve the problems of the EEC simply by appointing a couple of Scottish Commissioners in Brussels, I should be much happier. I did not oppose membership of the EEC on the basis that there were no Scottish Commissioners. The problems of the EEC are concerned with democracy. Until we get rid of the question of devolution and have stability we cannot begin to argue the EEC case.
All my life I have been opposed to exploitation. What worries me profoundly about the state of politics in Scotland today is that it reminds me of the eight years I spent in South Africa. I see sitting on the National Benches the kind of people who remind me of Afrikaaner Nationalists. Every time things got tough in South Africa—and we should reflect that within South Africa there is a white working class—they argued about the constitution, and this diverted attention from the real facts of life.
Within Scotland there is not enough discussion about economic affairs. There are arguments about what anthem should be played on the rugby field or the football field, and arguments on the constitution, but the important issues of jobs, housing, and education, are neglected. What we should be discussing is a decent and democratic life for our people.
We can destroy not just the United Kingdom—there is nothing sacrosanct about the United Kingdom; it has no validity if it does not serve the people who live within it—and not just local government and the Scottish Assembly; we can destroy democracy if we do not understand the great issues, namely, that people should be democratic, that they should be Socialist, and that they should have stability and work together wherever they come from and whatever their nationality.

Several hon. Members: rose—

Mr. Deputy Speaker (Sir Meyer Galpern): Order. The winding-up speeches are due to begin at 10.20 pm. I should like to accommodate two speakers before calling upon the Front Bench speaker.

10.9 p.m.

Mr. Iain MacCormick: The debate has been one of the most disappointing occasions of my life. The hon. Member for Aberdeen, North (Mr. Hughes) made one of the most disgraceful speeches I have ever heard in the House. No one in the Chamber can claim to have deeper roots in the Scottish National Party than I claim, and neither I nor any other member of my family in the past would have any truck with ideas of the kind put forward to the House tonight by the hon. Member for Aberdeen, North. It is disgraceful when we note that the only people in the Chamber who have ever stooped to use violence in any of its shapes or forms have been speakers from both the Labour and Conservative benches. They have been too clever, of course, to use it directly, but they use it by subterfuge. They say that they respect us, yet they say that we are like the African nationalist parties. How on earth could we be compared with them?
I was even more shaken earlier in the debate when the Minister of State, Privy Council Office made the same kind of

allegation concerning one of the SNP Members, trying to blacken the name of the SNP—and of Plaid Cymru—by an implication of violence.
We in the SNP—and for that matter those in Plaid Cymru—have much to be congratulated upon. Speaker after speaker in the debate made these implications, but they all left out the most important fact of all. We have already proved, time and time again, that we are not prepared to use any other means of furthering our aims than the purely constitutional means of the ballot box. Our very presence here proves that.

Mr. Robert Hughes: rose—

Mr. MacCormick: Many of the speeches, both yesterday and today, have been on these lines, but there are honourable exceptions, and I shall pick out two or three. I cannot in this respect pick out any speeches at all from the Conservative Front Bench, for clearly it has been visited by the death wish. Only last week we were told that the Conservatives are likely to hold only four seats in Scotland after the next General Election. It would appear that the Conservatives are hell-bent to prove that forecast to be true.
As the hon. Member for South Ayrshire (Mr. Sillars) said, we are faced with a political reality in Scotland, and that political reality is that we must have meaningful devolution. That is the one true fact to emerge from this debate.
If I may pay a very rare compliment to the Lord President, his speech seemed to hold out some promise. He said that there are elements in the White Paper which could be reconsidered, and that certain matters could be thought about, especially in terms of the reserve powers which at present it is thought ought to go to the Secretary of State for Scotland.
The speeches of the hon. Member for South Ayrshire and of the hon. Member for Greenock and Port Glasgow (Dr. Mabon) come together to a great extent. The hon. Member for South Ayrshire drew attention to the reality of the political situation and said that we must face up to it. Yesterday the hon. Member for Greenock and Port Glasgow said that he was quite prepared to accept the White Paper and that it is important that Mem-


bers of the House should unite to support it. I agree with the hon. Member entirely.
It does not matter to me what my eventual aim is, because I remember all the time that that aim will be achieved only with the agreement expressed in a democratic fashion, of all the people in Scotland and of all the people in Wales.
There were some ridiculous speeches by some English Members yesterday and today. They seemed to imply that, because they do not want this change to happen in Scotland or Wales, it should not happen in Scotland or Wales. To be brutally frank, most of the speeches of English Members—including that of the right hon. Lady the Leader of the Opposition—could have been made without reading the White Paper at all. We have gone much further than that in Scotland and in Wales. I believe implicitly that we can continue only if we can persuade the Government to modify their proposals in the interim between the White Paper and the Bill in order to give us a little more.
Clearly, we can support the White Paper, because we regard it as a stepping stone. But we insist that devolution is not a once and for all affair but a dynamic process. It is the beginning of an ongoing process which can only be achieved step by step with the agreement of the electorate. I believe that that is what we should be aiming at now.

10.15 p.m.

Mr. D. E. Thomas: This has been a depressing debate to listen to, with the exception of a few comic turns from Government supporters and a large number from the Opposition benches.
In the long time available to me, I wish to refer briefly to the aspects of the Welsh proposals which we in Plaid Cymru feel are totally inadequate to meet the key problems facing Wales. I refer to the lack of economic powers for Wales and the lack of substantial legislative powers in these proposals.
The Government obviously made a policy decision that there were to be no real legislative powers for Wales in the Assembly. But, having made that decision, they decided to fish round in the legislative system of the United Kingdom looking for some crumbs of legislative

powers which could be devolved. They came up with the constitutionally nonsensical proposal to devolve delegated legislation, and I hope that the Minister will attempt to justify this proposal.
As I understand the evolution of legislation in the United Kingdom, delegated legislation is consequential upon the primary acts of legislation in this House, and any powers devolved will be totally minimal and will not be able to influence major decisions of policy. Therefore, this attempt to provide the appearance of legislative powers is a typical con trick exercised by the Government.
As for the economic powers, we have heard a great deal in this debate about the economic unity of the United Kingdom. As a radical Socialist member of Plaid Cymru, I am more interested in economic justice than in monolithic economic unity. That is why I believe that regional economic planning for England and national economic planning for Wales and Scotland are a vital necessity to secure economic justice in the regions of England and in Wales and Scotland.
We have heard about the need to retain powers over the nationalised industries centrally. The preposterous suggestion in the Welsh proposals that there should be informal links between nationalised industry boards in Wales and the Assembly is one about which both the Welsh TUC and the Plaid Cymru feel strongly.
What is the point of informal links when the steel industry threatens the future of Shotton and Ebbw Vale, making steelworkers in Wales redundant as of today and organising lock-outs in steel works in Wales as the management is doing? What is the point of informal contact with threats of massive cuts in rail services? What is the point of developing a system of informal contacts unless economic planning power goes with it? That is why it is essential that the Welsh Development Agency should be made fully answerable to the Assembly and not have the kind of schizophrenic relationship proposed in the White Paper.
The other major issue is the block grant to be allocated to the Assembly. The block grant will be an annual political football between Cardiff and Westminster and, in the case of Scotland, between


Edinburgh and Westminster. We argue that the grant should be allocated on a system based on a formula. There has been a move towards this in the Department of Health and Social Security where we see allocations to RHAs in England devised on an objective basis of need. But there is no attempt to do this with the block grant.
We see this Assembly as a small step towards democratisation for a tier of government in Wales but as an extremely inadequate step to deal with the major social problems of our country, the major economic catastrophe that we face with 70,000 Welsh people unemployed, the lack of development in our health services, and the drastic cutbacks and wrong priorities that we see in public expenditure in Wales.
Those hon. Members who have talked about the economic unity and integrity of this Kingdom must get it into their heads that there is no point in unity which does not allow an equal standard of living for the people of Blaenau Festiniog and the people in the surburbia of South-East England. That is what we are fighting for.
I am surprised that hon. Members opposite, who are supposed to be Socialist, think that centralised British capitalism is the greatest achievement of the working peoples of Britain. I believe that their greatest achievement is yet to come. It will be a partnership between the working people of Wales, Scotland, England and Northern Ireland in a truly democratic decentralised United Kingdom.

10.20 p.m.

Sir Michael Havers: I am sorry to see that the hon. Member for Aberdeen, North (Mr. Hughes) has just left the Chamber, because in his attractive and well-reasoned speech he reminded the House of something that I believe is important—that the issue is what form devolution should take rather than whether it should exist at all. The principal quarrel I have with the Government White Paper is the power that is given to the Assembly to legislate and the part the Executive will play. This goes very much further than the Douglas-Home Committee Report in 1970, which recommended that the Assembly be set up to participate in the legislative process in Parliament and therefore be part of Parliament. Whether one should go as far as the Report stage or whether the Report stage should come back here is something which could be flexible according to the type of measure sent to the Assembly.
My hon. Friend the Member for North Angus and Mearns (Mr. BuchananSmith) was laughed at and scorned today when he stated, in circumstances envisaged by the Douglas-Home Committee, who was going to take the Bill through the Scottish Assembly. This has been clear since 1970. In paragraph 301 it says:
Scottish Bills would be introduced into the assembly by the Scottish Ministers or she Scottish Law Officers, who would be responsible for piloting them through the Second Reading and Committee and Report stages. If Members of Parliament so decided in respect of a particular Bill, a Report stage could also be taken in the House of Commons.
This proposal would avoid many of the difficulties which exist in the White Paper scheme particularly, because of the right to initiate legislation and of course the part of the Executive.
We must face reality. One cannot guarantee that all will be sweetness and light between Edinburgh and Westminster. It would be madness to think that this would be so. There will be arguments about what is to be devolved, what is ultra vires or intra vires, what is a fair policy decision under paragraph 57 of the White Paper, and about the veto in Westminster.
Tension will also be caused by those matters which are not devolved—the raising and expenditure of revenue, the supply of money and credit, the framework of trade, the Common Market and other international treaties. These are areas of political tension which exist in all federal systems, particularly in Canada, Germany and Australia. There will be mounting pressure by such an Assembly in Scotland to take over these powers, perhaps step by step, faster or slower according to the political climate. But the pressure will mount, and in the end could be irresistible.
Let us look first at what is to be devolved and the issues that will arise there. First, it seems to me that the distinction between vires and policy could easily be blurred by any Government in Westminster. However these difficulties are resolved, friction must be caused. That friction will eventually poison the atmosphere and make co-operation more and more difficult between Edinburgh and Westminster.
The White Paper suggests that the issue of vires should be decided by the Secretary of State on the advice of his Law Officers. In other words, that means that the Government decide what may, in reality, be a very difficult piece of construction, and so one would have a veto—a legal veto, it is true, but one decided in secret by discussion between what may be four Law Officers then advising the Secretary of State.
As a former Law Officer myself, I would not like to say that Law Officers are always right. We have had experience, over the years, of the courts disagreeing with propositions advanced by Law Officers. Recently, we have seen the Home Secretary badly advised by his own Department and saying that he was not advised by Law Officers. What would happen if the four Law Officers disagreed? Supposing they split two and two—for example, the two in England saying that something was ultra vires while the two in Scotland said that it was intra vires? What would the poor Secretary of State do? He would have no one else to consult.

Mr. Gerry Fowler: The Lord Chancellor?

Sir M. Havers: Perhaps. But what are we to be left with in the end? Why can-


not we have these matters discussed, debated and decided by a court? This could be done quite easily, as the right hon. Member for Devon, North (Mr. Thorpe) said yesterday, by making use of the powers that already exist in other bodies, such as in the old Stormont and in Australia. In Australia, if there is an issue between the Commonwealth Government and the State Parliaments, the Privy Council decides it. That would be an advantage, because it would not need a great deal of preparation for the Privy Council to be able to consider and give an advisory opinion both to Edinburgh and to Westminster before the legislation was completed. It could be done in that way, because it would be a construction of the Act of devolution as to whether the power which Edinburgh was seeking to take was devolved or not.

Mr. Dalyell: Surely that would bring Her Majesty's senior judges right into the arena of politics.

Sir M. Havers: No, it would not. They would be construing a statute. It would be entirely non-political. It must be nonpolitical in order to justify the Government's argument that it would be a nonpolitical issue on which the Secretary of State would be advised by the Law Officers. The judges would not be involved in the political arena. There would be the advantage of a public hearing, with arguments properly and openly advanced by those seeking to say that the issue was ultra vires and those seeking to say that it was intra vires. The Assembly would be able to instruct counsel and Westminster would be able to use the Law Officers, or someone else. They would all be heard in court in public and the issue would be decided by the most reputable judges in the land.

Mr. George Cunningham: In addition to Australia, the Judicial Committee of the Privy Council had this power in Canada, and it was when the Judicial Committee was thought, within Canada, to be intervening in favour of the federal level as against the provincial level, that the Canadian authorities insisted, at provincial insistence, that the right of appeal to the Privy Council should be abolished. Surely the same thing would happen as between Edinburgh and Westminster.

Sir M. Havers: No. I cannot see anything attractive in a decision not arrived at in the open, on which no one knows the arguments, where one side or the other is not allowed, except by written brief, to know arguments advanced by the other side, and where the final decision taken by the Government may go far beyond the White Paper. But under the system we suggest, immediately the problem arose—when the Bill was published—the issue could be decided. I can see difficulties arising if an amendment, as a result of an advisory opinion, were made to cover the decision of the Privy Council. We could perhaps have another delay while further argument took place. But if it was a question of whether a matter was ultra vires or intra vires, that advisory opinion would probably deal with the matter, however, without causing any unacceptable delay in the proposed legislation.
This will avoid different views about rights and vires to legislate turning into arguments leading to the blurring of the lines about compatibility of policies. If the Law Officers' advice were that a matter was ultra vires others might profoundly disagree and Whitehall would then be accused of sheltering behind the legal veto as opposed to the policy veto so as to prevent Westminster having the right to stop or permit Assembly legislation under the policy provisions.
If an Assembly is given power it must be entitled to exercise it. The courts must have the power to strike down that legislation if the Assembly exceeds the power which has been devolved to it. To provide what could be believed to be a political veto, however honestly operated, which will be exercised in secret and subjected therefore to criticism and accusation of bad faith, is, in my view, the worst of all solutions.
The problem will probably arise in a more acute way concerning the incidental powers which are referred to in paragraph 57. When will the Government make the extension and say that while this, strictly speaking, is ultra vires, it is an incidental power and we shall turn a blind eye to it or accept it? In some cases they will, but in others they will not. Where they do not, they will be exercising strictly the power of ultra vires although they may well have taken a different course before when a strong argu-


ment may well have existed. Again the difficulties of vires about incidental powers have arisen in Australia.
We then come to the general policy grounds on the veto. We must face the situation that in future the Assembly majority could be different from the political colour of the Government at Westminster. The Government with a majority at Westminster would be able to reject a Bill which the Assembly had the power to introduce and the majority to pass. That situation seems to be an example of the consequences of falling between two stools, the consequences of trying to get the best of both worlds without accepting that one cannot have many of the outward trappings of federalism and at the same time, still pretend that one can successfully retain the controls at Westminster. Throughout my consideration of the White Paper that seems to be the Government's difficulty.
The question of judicial review was raised and the Lord President dealt with that matter today.

Mr. Edward Short: Will the hon. and learned Gentleman apply himself to the point which I made today—namely, whether it is written into the Devolution Act or not, the power to intervene by legislation is inherent in our constitution. It is present. This Parliament can always intervene whether we use the device I am suggesting or not.

Sir M. Havers: We may go through the whole process of devolving power to an Assembly. Then, later, we may, as a policy decision, say that, although the Assembly had the power to introduce legislation under the devolution Bill and had the majority to pass it, we do not like it and will prevent it. In my view that is exactly the type of problem which will arise from having a pretence of federalism without going through with it.
A certain amount of comment has been made about the judicial review. I should be the last person to consent to any Act of Parliament which deprived a citizen of a direct right which at present exists. Mistakes are made in Parliament by the draftsmen, the lawyer Members, by the advisers and by hon. Members themselves. We cannot foresee every circumstance which may arise. We have seen

examples of this in the past. A mistake may arise in a particular case which involves perhaps only one person or a small group of people who did not appreciate that they would be affected by it at the time that the Bill went through the Assembly and therefore would not be alerted to it but who are later manoeuvred in some way into a position where they are affected by the provisions in a Bill from Edinburgh which they are advised by their lawyers were ultra vires. In my view that must be permitted to go to the courts.
The Lord President said that the Government were not agreed about this matter. I respect him for his frankness and understand why that situation arose. But when one has a right which profoundly affects an individual, which was not obvious when the measure was going through the Assembly because it had been overlooked or missed, it cannot be right that he should be deprived of it later through the fault of either Westminster or Edinburgh.
The right hon. Gentleman made use of an analogy. He said that the courts cannot intervene in Westminster X. That is quite right, but that analogy does not apply here. The question of vires can never apply to Westminster A. Westminster is supreme. There cannot be any question of vires here. But, when an Assembly is working within the devolved powers of Westminster, vires could arise. The courts interfere now when issues arise on secondary legislation where the powers taken in that legislation exceed those granted by the enabling Act. It can arise 20 years later, to use the period mentioned by the Lord President, if the court is satisfied that the power that was taken by the Minister under the enabling Act was outside the powers granted to him.
I should like to comment briefly on the powers of the Secretary of State. In my view they are far too great under this proposal and must eventually prove unacceptable. According to paragraph 49, in the absence of any Royal Prerogative, the Secretary of State has absolute power in certain important areas involving the Assembly.
What happens if the Executive goes outside the framework of the constitutional law and of convention and acts


with the obvious support not only of the majority of the Assembly but of the country of Scotland? Looking at paragraph 49, what then can the Secretary of State do? There cannot be any question of a vote of no confidence which might arise in some situations. If a no confidence motion were put, the Executive would win it. How is the Secretary of State to dismiss that Executive? There is no power to prorogue. The term of the Assembly is four years. If he came back to this House, as happened, for example, with Stormont, and said. "We must get rid of the Assembly", we would then have a direct ministerial decision from Whitehall by a Government of perhaps another political colour dismissing an Assembly—a Parliament in Edinburgh—not for the reasons which existed in Northern Ireland but because there may be a fundamental policy difference between them.
That difficulty follows from seeking to frame a constitution with many of the powers of federalism but without intending its full consequences. Listening to the Prime Minister yesterday, it seemed to me that he realised this difficulty when he spoke of the consequences of a federal solution. But he did not seem to accept that we cannot give an Assembly an Executive with wide powers to legislate without many of the consequences of federalism.

Mr. John Mendelson: That is why some of us thought that the Prime Minister's speech was an excellent argument against not only federalism but his own White Paper.

Sir M. Havers: I am grateful to the hon. Gentleman. That is exactly what I am seeking to show. What has been done here is under a cloak of not providing federalism. Because the essential safeguards to the Assembly which would exist under federalism are not present, the conflict about which so many hon. Members have spoken in the debate is inevitable.
I hope that the Government will treat these comments as useful criticisms of the proposals if they insist on going on with them in their present form.
It is clear to me that once the Assembly has the right to legislate, the construction of what has or has not been devolved must eventually lead to dis-

agreement, to a sense of injustice and ultimately to conflict. If we add to that the power reserved to Westminster to veto legislation which the Assembly has power to legislate, it can only heighten the conflict and could lead to the very situation which most of us want to avoid.

10.40 p.m.

The Minister of State, Privy Council Office (Mr. Gerry Fowler): I think it was the hon. Member for Daventry (Mr. Jones) who suggested that those who remain unionists in some form ought to seek a general agreement on objectives. I hope we can agree that the objectives of any scheme of devolution must be twofold: first, that we wish, by taking government closer to the people, to improve democratic scrutiny and control of government and thereby enhance the efficiency of government.
The hon. Member for Devon, West (Mr. Mills) suggested that we were moving towards bigger units. He instanced the EEC, and he said that countries were moving towards international organisations. In my view, it is all the more imperative, therefore, that we consider carefully whether all the powers that we have exercised hitherto at national level are properly exercised at that level or whether they could, without loss, or indeed, with a gain in efficiency be exercised at any other level of government—that of the nation in the case of Scotland and Wales, and that of the regions in the case of England.
That is the first objective on which I hope we can all agree.
The second objective on which I hope we can all agree, with the exception of the Members on two of the Opposition benches, is that we wish to preserve the unity of the United Kingdom, both politically and economically. I hope the House will accept that the Government's proposals were designed entirely with those two objectives in mind.

Mr. Reid: rose—

Mr. Fowler: Not now. The hon. Gentleman will recall that last night one of his hon. Friends was somewhat loth to give way to me. Perhaps the hon. Gentleman will allow me to get into my speech before he starts to intervene.
For the first time we have a set of proposals for devolution. We believe that we are broadly in the target area, but I do


not say that these proposals are perfect or are not susceptible to improvement. That is why this debate is so important and why we are listening so carefully to everything that is said. I noted carefully the remarks of the hon. and learned Member for Wimbledon (Sir M. Havers) and I shall draw them to the attention of my colleagues. I propose to deal with some of the issues that have arisen over the past two days and in the course of that I shall allude to the hon. and learned Gentleman's remarks.
I begin by turning to two suggestions made by the right hon. Lady the Leader of the Opposition. First, she suggested that the particular reserve powers related to the United Kingdom's international obligations were undesirable and she proposed that a breach of EEC obligations specifically should be left to be dealt with by the relevant court. That statement is to be found at col. 237 of yesterday's debate. I suggest that that would be an odd course to adopt. The difficulty is that it is the United Kingdom Government who are responsible for meeting our EEC obligations, and if the Scottish Executive or Assembly were in breach of a Community Directive it would be the Government of the United Kingdom who would find themselves in the dock, and not the Scottish Executive or Assembly. The Government must, therefore, have powers to deal with such a breach, and we suggest that it is infinitely preferable to have powers to deal with such a breach before it occurs and before we have to incur unnecessary expense in contesting a case in the European Court.

Mr. Gordon Wilson: In order to meet the situation of the Scottish or Welsh Assembly disregarding an EEC recommendation because it feels that it is unacceptable to Scotland or Wales and will not implement it, which the hon. Gentleman considers to be a possible outcome, will he endeavour to persuade the Government to renegotiate the arrangements within the Common Market to ensure that there is independent representation of the Scottish Assembly there so that Scottish interests are taken care of, and also so that if the Scottish Assembly does not meet an obligation put on it by the EEC it will be Ministers

of the Scottish Assembly who will be held responsible?

Mr. Fowler: The hon. Gentleman seems unable to grasp the fact that separate representation in the EEC, whether on the Commission or the Council of Ministers, is the appurtenance of a separate State which would be a signatory to the Treaty of Rome. I know that that is the policy of the hon. Member's party. I will not argue with him about that, but he must not expect me to say that this Government will advance proposals which fit in only with the ultimate attainment of his own policy goals.
That brings me to my second point about the Leader of the Opposition's speech. Perhaps she will forgive me if I come to it by a somewhat devious route. We have been talking about the powers of this House or the Secretary of State in terms of vires or of over-ride on general policy grounds. We should distinguish three elements. The first is the determination of vires before any proposal before the Scottish Assembly becomes law. Here we take on board fully what the hon. and learned Member for Wimbledon and the Leader of the Liberal Party have said. We are not wedded totally to the concept that advice to the Secretary of State should be tendered by the Law Officers. We have considered, for example, the Judicial Committee of the Privy Council. There are advantages and disadvantages in each of these courses, but we are determined that there shall be some means of determining vires before any proposal becomes law.
Second, there is what we have called in the White Paper, in shorthand, judicial review. By that we mean a case brought before the courts perhaps 20 or 30 years later, in which the citizen pleads that he is the sufferer from an act of injustice simply because the powers under which that act was committed were ultra vires. Here, the White Paper is neutral. There is a difficulty here. We might remember the Northern Ireland experience. Because of the difficulties which arose under the 1921 Act, culminating, as the right hon. Member for Penrith and the Border (Mr. Whitelaw) will well remember, in Parliament having to pass an Act through all its stages in less than 24 hours to rectify the consequences of a judicial decision,


Parliament deliberately reversed the position in the 1973 Northern Ireland Constitution Act. Judicial review in general—that is to say, leaving aside the special case of religious discrimination—was excluded by the Act.
I do not want to take a stand now on which course was right or wrong. I only know that, in 1973, the Leader of the Liberal Party made no protest and no reference to General Franco. So this is not an issue on which we should get excite. It is one for clam and rational examination.

Mr. Whitelaw: Although I accept that position, looking back on what we did in 1973, I have subsequently wondered whether what we did was right. I think that I was wrong in the view that I took then.

Mr. Fowler: So we are agreed that this is a difficult question of balance. It is not a question of black and white.
The third matter, which has caused the most excitement over the past two days, is the question of the reserve power to over-ride an Act of the Scottish Assembly on general policy grounds. As the Prime Minister and the Lord President have made clear, the new reserve power is inherent in any system of devolution. That is what retained sovereignty means. That is where I differ from the hon. and learned Member for Wimbledon when he says that we have a system with the trappings of federalism, because the crucial trapping of federalism is precisely the division of sovereignty between the federal Government and the State or provincial Governments. That does not exist in this scheme, because it is a scheme of devolution and not of federalism in that sense.

Sir M. Havers: When I said "trappings" I meant the cloak without the reality underneath it. When we say that they will have the right to initiate and pass legislation but we at Westminster will still have the power to kill it, that is the cloak of federalism without the reality.

Mr. Fowler: I should have said that the hon. and learned Gentleman has got it backwards. We have produced the reality without the trappings—the division

of sovereignty. However, we can argue about that perhaps at a later date.
At issue in this debate are the sort of simplifying procedures, if any, which should exist for the exercise of that reserve power, which is inherent in retained sovereignty, by something short of the full panoply and the full delay of passing a full-blown Act of Parliament. That is all that is at issue. The Government believe that there should be some such democratic procedure, granted that matter will already have been considered at length by another democratically elected Assembly.
Yesterday's debate revealed some misunderstanding of what is proposed. We should be crystal clear that the Secretary of State will have no power of legislative veto on policy grounds. On those grounds the only thing he could do on behalf of the Government, and without Parliament's specific authority, would be to refer an Assembly Bill back. That power is set out in paragraph 58 of the White Paper. In effect, it is merely a power to fire a shot across the bows—it is a formal warning, following informal warnings given at an earlier stage. What the Assembly then does is entirely at its own discretion. If it is set on its course it can send the Bill back to the Secretary of State, within 24 hours if it likes. If the Government want to persist in their opposition to the Bill they must bring the matter quickly to Parliament. If they cannot persuade Parliament of their views—and they would not necessarily carry all Scottish or Welsh Members in such a situation—the Assembly Bill will go forward for Royal Assent. There is no power at all for the United Kingdom Government alone to over-ride an Assembly Bill on policy grounds. It is this House and another place that would be able to do that.
If I understood the right hon. Lady the Leader of the Opposition correctly yesterday, she believes that the whole matter of the United Kingdom interest should be made one of law rather than of policy. The gist of her argument was that the Bill should be so framed that, in effect, every possible difficulty is allowed for in the drafting and, therefore, dealt with wholly as matters of vires so that no special procedure for reserve powers for over-ride on policy grounds would be needed. Theoretically


I concede that that is an attractive course. We examined it carefully when we developed our proposals and we abandoned it with some reluctance. I entirely accept that the legal boundaries of devolution should be as clear as possible and the more the difficulties can be handled as a matter of vires and the less as a matter of policy the better it is for everyone.
No one would be more pleased than the Government if the policy procedure never had to be evoked. To hope for that is one thing, to count on it to the point of having no such procedure is quite another. The reason for not relying wholly on vires is a matter for sheer practicality. The business of Government today is so wide and complex and areas interact with each other so extensively that it is simply not realistic to try to foresee and prohibit every conceivable way in which the exercise of devolved powers could touch on the responsibilities remaining with the Government and this House.
After over a year of work on this subject therefore, our judgment is that the job would not be feasible at all. Even if it were feasible, we should face the fact that three consequences would certainly follow. First, we should have a Bill of quite staggering length and complexity. Secondly, and by the same token, we could not possibly have it ready in anything like the timetable we envisage and, thirdly, because the effect would be to remove from the Government any power of discretion, we should have to devolve in a far more guarded and qualified way than we now propose. We should have to allow for every possible contingency and difficulty in advance. In summary, we should have a huge, late and more grudging Bill, which is not desirable. That is the only reason why we have not adopted the right hon. Lady's scheme.

Mr. Reid: I thought that devolution was supposed to be good for people and not a bad arid legalism. I want to ask the Minister one or two simple questions by which devolution should be judged. What will the Government's devolution proposals do to eradicate poverty in Scotland, build houses and stop one child in 10 being born to failure? Does the Minister not realise that that is how his

devolution proposals will be judged in Scotland?

Mr. Fowler: That kind of intervention, at five minutes to 11 o'clock on the second day of a major debate, is an abuse of the procedures of the House. The hon. Gentleman should know full well that constitutional documents do not provide answers to economic problems—except in the cloud-cuckoo-land in which the SNP seems permanently to dwell.
I want to comment on the scheme which the right hon. Lady the Leader of the Opposition and the hon. Member for North Angus and Mearns (Mr. BuchananSmith) unveiled today as an alternative to our scheme. I shall not talk about this at great length, but I must suggest that what the hon. Gentleman was saying today when he said, I believe, that under his scheme the Secretary of State would be much stronger than he would under the Government's proposals, seems to be very questionable. As I understand it, he was suggesting that a Secretary of State who would be a member of a United Kingdom Government, and some Scottish Ministers, perhaps, drawn from the membership of the Scottish Assembly—I assume that these would be junior Ministers, perhaps in the Scottish Office—would have to pilot a Bill through several of its stages in the Scottish Assembly even though the Assembly was controlled by a party hostile to that of the Secretary of State. Subsequently, he would then have to pilot the Bill through this House and, as I assume, it would then have to wend its way through another place.
This raises problems of the most staggering complexity. I foresee a situation in which a Scottish Assembly controlled by a party different from that which was in the majority in this House, and perhaps different again from that in a majority in another place, would deliberately attempt to block the legislation introduced by the Secretary of State, consistently, throughout his term of office. This could lead only to a weakening of his authority, unless he were then to use this place as a means of legislating, using the retained sovereignty of Parliament irrespective of the will of the Scottish Assembly.
That would seem to me to be a very grudging kind of devolution. It would not seem sensible, in any event, to say


that an Executive appointed by the Government formed of a majority party in one Assembly should have to take his legislative proposals through another Assembly perhaps controlled by another party. That is at the nub of the difficulties of the Opposition's scheme.
I should like to make a final comment about England because so many of my hon. Friends from England have spoken in the debate. As my right hon. Friend the Prime Minister said yesterday, we shall shortly lay before the House a discussion paper on the future of regional arrangements in England. No public consensus has so far emerged, but it seems reasonably clear, as the Kilbrandon Report pointed out, that the interest in general in devolution is considerably less in England than it is in Scotland and Wales. The Government's proposals for Scotland and Wales have, however, been considered in an overall United Kingdom context and take account of factors affecting the United Kingdom as a whole, including England, such as the need to maintain overall economic and political unity. The need for any changes in England will similarly have to take account of these general overriding United Kingdom considerations as well as specifically English factors.
Meanwhile, however, in my view it would be utterly wrong for any of us to hold up Scotland and Wales, where a broad consensus is now clear, after long public discussion and consultation, not on the details of the scheme but on the desire for devolution as a concept, against an indefinite date when the way forward is equally clear for England. That is why we have brought forward these proposals. It in no way indicates what would be our plans for England in the future. It is no way inhibits our thinking in the future about a possible such scheme. However, I must stress the word "possible" and the word "future". In the meantime, I am sure that we ought to make progress with the scheme we have put forward for Scotland and Wales. With good will, from men of good will, in all of those parties the objective of which is to maintain the Union, we shall indeed see these proposals, or proposals like them, on the statute book before the next Session of Parliament is out.

Mr. J. D. Dormand (Lord Commissioner of the Treasury): I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

WELSH GRAND COMMITTEE

Ordered,
That during the proceedings on the matter of the Economy in Wales, the Welsh Grand Committee have leave to sit twice on the first day on which they shall meet; and that notwithstanding the provision of Standing Order No. 64 (meetings of Standing Committees) the second such sitting shall not commence before Four o'clock nor continue after Six o'clock.—[Mr. Walter Harrison.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dormand.]

PRICE CODE

11.1 p.m.

Mr. Michael Neubert: Adjournment debates, by convention, normally deal with minor matters. I wish tonight to take a major issue, the problem of poor productivity, and to focus attention on a narrow and specific aspect—namely, the discouragement to improved productivity contained in the provisions of the Price Code.
My starting point is the astonishing fact that in the first quarter of 1974, during a substantial part of which Britain was working a three-day week, production was 96·5 per cent. of the level achieved by full-time working in the same quarter of the previous year. From then on it seemed to me that the secret was out and that the solution to many of our problems was crystal clear. If only we were able to improve productivity as dramatically again, our difficulties would disappear as fast as traffic wardens melt away at the first sight of rain.
Since then the skeleton of productivity has been brought out of the cupboard and exposed to the bright light of day. In particular the appallingly low level of production in the car industry has been highlighted by three official reports in quick succession. I refer to the Ryder Report, which on this subject was partially expurgated, the Report of the Expenditure Select Committee, and, most


recently, the Think Tank Report. In singling out the car industry, I do not wish to suggest that it is any better or worse than industry at large. Far from it. It is merely that in the case of the car industry these documents and the evidence contained in them are so ready to hand and the facts they expose are also available.
We have a serious situation in the car industry, the most trenchant comment on it being the conclusion by the Think Tank that, given the same job conditions with the same power at his elbow, the British car worker achieves only half as much per shift as his continental counterparts.
It is obvious that the right hon. Gentleman the Chancellor of the Exchequer has become aware of this grave problem. In a newspaper article only last month he said that OECD figures had again shown that the British industrial worker produces well under half the amount produced by the French, German and American workers, and not much more than half the amount produced by the Japanese worker. Therefore, one can assume that this point is well taken at the highest level of Government. That being so, the average person would be amazed to learn that the Government through the Price Code appear to be discouraging productivity. However, since the average person does not have a very high opinion of politicians, he may not be so surprised after all.
In suggesting that the Price Code is responsible for low productivity, I do not refer to the immense burden of paper work involved in such a bureaucratic system of control, involving the creative energies of those in industry. I am seeking to draw attention to the fact that there is a natural disincentive to improved productivity within the provisions of the Code.
Let me try to explain how it works. If a company, by improved organisation, manages to achieve a reduction in costs, the saving that is achieved must, under the Price Code, be passed on in the form of lower prices to the consumer. As the company, again under the Price Code, has its profits limited to a fixed percentage of costs, this means in turn that its overall profit is reduced. We have the result that there is a disincentive to improve productivity as a consequence of the provisions of the Code.
It stands to reason, particularly because most reductions in cost these days would involve protracted negotiations with intransigent union leaders about manning levels, that no company manager will make the superhuman efforts necessary to ensure that his company is financially worse off than when he started. The Price Code, which is intended in its highest form to be a means whereby prices are kept down, is in this respect at least, the instrument by which the Government ensure that prices are higher than they need be. The effect on investment is equally discouraging. Some companies can actually be involved in losses let alone managing to achieve an adequate return on investment.
I hope that I have not made this explanation too clear because if too many people understand the absurdity of this they might rise up in rebellion and storm the Palace of Westminster tomorrow. Such are the facts. They should be made known.
On 6th November last at the annual convention of the Institute of Directors at the Albert Hall the Secretary of State for Prices and Consumer Protection claimed that the Government's new strategy was the regeneration of industry. She said that its objective was to ensure a profitable and effective private and public sector. Moreover, she said that the Government's task was to release sources of finance so that higher levels of investment could be achieved. That was on the glad, confident morning—the morrow of the Chequers conference when there was a call for a new high-output high-wages economy. Since then many things have happened, notably the Chrysler crisis and the Government's proposals for solving it.
There must be considerable doubt now whether the Government's intentions are to be upheld. This question of productivity is, therefore, a useful test case and an important one for those in industry and commerce who would like to play their part in a drive to achieve much better productivity in the interests of the nation as a whole. If the Government mean what they say and want to achieve better productivity and higher output it is time for their words to be matched by deeds.
On the other hand, it is true that the Secretary of State may, on that occasion


in November, have been offering soothing saccharine words to stop members of the Institute of Directors from choking on their packed lunches. I hope that that was not so. I hope that she has a sincere aspiration to see the much freer, more prosperous and profitable industry which she said she sought, which aspiration has since been confirmed by her most senior colleagues. What the Under-Secretary should do in his reply is say whether the Government can declare that they intend honouring their intentions of removing the Price Code impediments to improved productivity. If his answer is that they do not, I fear that people will conclude that the Government lack the political courage of their innermost convictions and that their belated brave words are no more than an empty gesture.

11.10 p.m.

Mr. Giles Shaw: My hon. friend the Member for Romford (Mr. Neubert) has done a service to a thinly attended House by seeking to explain the devices the Price Code employs in the name of productivity. The problem is that the Government have seen fit to use the word productivity, which is an incentive word dealing with reducing costs and increasing output, but have applied it in an opposite direction. In past debates on amendments to the Code, we have seen the word productivity used to describe something which has the opposite import.
We have frequently questioned the Secretary of State about investment allowances and reviewing the Code and she is on record as saying that she is most unwilling to review the Code in any marked degree, even though she believes it is necessary to stimulate investment and improve the situation relating to costs and returns.
Having issued a second consultative document on selective price restraints scheme involving a number of new measures necessitating amendments to the Code, the Government have shown that it is possible for them to amend the Code, accept the points put by my hon. Friend the Member for Romford and admit that the productivity argument is a myth. The word has been used to disguise certain restraints on costs to the detriment of efficient companies and it is high time we liberated our industrial energies to the full.

11.12 p.m.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): May I first answer the points made by the hon. Member for Pudsey (Mr. Shaw)? The amendments proposed to the Price Code or the selective price restraint scheme are of an altogether different order from the amendments which would be necessary to give effect to the propositions put forward by the hon. Member for Romford (Mr. Neubert). The Secretary of State has never suggested that certain minor amendments to the Code could not be embarked upon, but she has tried to make clear on a number of occasions that there can be no major amelioration of the Code during the current phase of wage restraint policy. That remains the position.
I am grateful to the hon. Member for Romford for raising this subject because he has reminded us of a point that can be all too easily overlooked in debates about prices. He has raised it before and I understand that he hopes to bring it up again in a different context. The struggle to contain the rate of increase in the price level and to keep our prices competitive in export markets is not just a matter of scrutinising costs or of dealing with excessive or monopolistic profits, important as these things may be.
We do need to do what we can to keep industry's input costs down. The price of imported food and raw materials may be outside our control, but the rate of increase in the money we pay ourselves in wages and salaries is not. The Government's strategy for attacking inflation tackles this head on. The results of this policy are apparent in the latest statistics for price movements, which are encouraging.
But it is equally important that means should be found to squeeze the most efficient use out of inputs, whether of men or materials. The Government's strategy for industry, endorsed recently at Chequers by representatives both of the unions and of management, drew attention to some of the factors which may underline the relatively poor performance of United Kingdom industry by international standards. These are set out in paragraph 5 of the White Paper "An Approach to Industrial Strategy". Such factors are commonly considered to include the low rate of investment in this


country, inefficient use of capital, low labour productivity and changes of Government policy which make it difficult for industry to plan ahead.
These factors have been persistent in our industrial history since long before the introduction of the Conservative Counter-Inflation Act of 1973. They have been with us since the war. It does not help to attribute them to Government of any one complexion. Their roots lie deep in our industrial, economic and social history. We require a deliberate effort to improve our industrial performance at all levels. The initiative of the Chequers meeting now has to be followed up, and there is no prospect of that not happening. It has been progressed systematically through the organs of the National Economic Development Council. Only today the Council was considering further papers on how the Chequers strategy might be carried forward and applied to the problems of particular sectors.
At the same time, as the Chequers document concluded,
the main responsibility will lie with both sides of industry in the sectors and firms involved".
The Government's policy for prices, and the present instruments of the Price Code and the Price Commission have to be set against this wider context. Last July's White Paper "The Attack on Inflation" said that the Government
recognize and share the concern … that if pay is restrained prices must also be restrained".
This is almost now a conventional wisdom. Sir Campbell Adamson has added the weight of his voice to that view only recently. The White Paper went on to point out that severe action on prices
is simply not possible after nearly three years of strict price control without depressing investment and causing additional unemployment".
The White Paper emphasised the need to increase the level of productive investment, if the standard of living in this country is to be adequate in the future. It pointed to the fact that increased investment in a mixed economy has to be mainly paid for out of profits, and that if the private sector is to increase investment in the future it will need adequate resources for the purpose.
The hon. Member made that point himself at Question Time on 8th December and the Government do not question it. It is common ground between us. But tonight he drew a further conclusion which I cannot so readily accept. I understood him to suggest that the Price Code should be immediately relaxed to a major degree. The Price Code as it now operates is not a serious constraint on firms improving efficiency or re-building profits. The White Paper proposals are a package. The limit on incomes, which has proved itself 100 per cent successful, is closely linked with other policies deployed in the White Paper for price control and the protection of the consumer. We cannot simply keep one and do nothing about the other.
The co-operation which people of all walks of life have given to the pay policy has been on the understanding that the Government for their part will keep faith with the measures they have promised to keep price increases to a minimum and to protect the consumer. That is one reason why my right hon. Friend the Secretary of State for Prices and Consumer Protection told the hon. Member on 8th December that it was not her intention to make fundamental changes in the Price Code controls before the end of the current phase of the counter-inflation policy next July.
Between now and July, as the hon. Member will be aware, the Government and the two sides of industry will have to consider and agree on the next phase of counter-inflation policy, and what it implies in terms of pay, prices, productivity and investment. The policies we follow after July of this year may or may not involve the continuance of anything that would be recognisably based on the present Price Code.

Mr. Giles Shaw: The Minister suggested that he did not believe that the operation of the Price Code had seriously reduced the ability of companies to increase profits. Surely, the Price Commission's report demonstrated that, with profit margins of 54 per cent. or 56 per cent. of the reference level, the Price Code has been a major restraint upon profitability, and profitability is the major source of investment income. When the Minister comes to discuss the review of the Code with the other side


of industry, I hope that he will have this point in mind.

Mr. Maclennan: I shall have in mind that the major factor has been the recession through which the country is passing, which I believe to be the major cause of the depression of company profits.
My right hon. Friend has made clear on many occasions that the complexities of the Code do not lead her to believe that it is necessarily the ideal instrument for the purposes for which the Conservative Government introduced it. That means that I can deal only in a hypothetical and contingent way with the more technical criticisms that might be advanced, and criticisms of the kind made by the Gentleman, against the present Code as it affects productivity.
The hon. Gentleman attacked the Price Code as a positive disincentive to firms which want to improve productivity and efficiency—and it has been attacked in other quarters for the same reason—because firms are required to limit their increases in prices to those which can be justified in terms of increases in costs per unit of output. Costs "per unit of output" are a function of two quite different things. The first is the efficiency with which those inputs are used. To illustrate—for the tailor, it is not only the cost of the bale of cloth but the number of garments he can cut out of it; not only the assistant's wages but whether the assistant could turn out more if he was given a new sewing machine.
The rule in the present Price Code means that normally any improvements in efficiency in this sense have to be reflected in the price. The benefits must be passed on to the consumer, because they result in a reduction in "costs per unit of output" and hence in the degree to which the firm can make a case to increase prices.
This has been a feature of the Price Code since it was first introduced by the Conservative Government in 1973. I do not know that it is necessarily an objectionable feature—certainly not from the standpoint of the consumer. From the standpoint of the firm itself, I find it difficult to believe that any firm can be put at a positive disadvantage by introducing ways to cut costs. If lower

costs are reflected in prices, then the firm is likely to improve its competitive position vis-à-vis its competitors, to increase its sales and to increase its profits by the margin on every extra unit sold.
At the same time, I understand the contention that there might be a greater incentive to firms to search for means of improving productivity if the Price Code permitted the benefits to be split rather differently, with a proportion retained to widen profit margins.
When the present Government reviewed the Price Code in 1974, we examined whether the rule about costs per unit of output could be modified in the direction technically known as input costing. Representatives of industry at the time were not, I must admit overly enthusiastic about these proposals because they were at that time potentially unattractive to firms whose output was declining. But I believe that the possibility of a move to input costing could well be worth study, particularly as we might now be moving out of the present trading phase. We shall be studying its feasibility—I give that categorical assurance—as part of the wider review of the options for the next policy phase.
I hope that it will not be drawn from that statement, however, that it is a commitment to do more than review the situation, because the undertaking to review and consider the next phase is itself a much wider commitment than this narrower option.
As to the more general effects attributed to the Price Code on industrial confidence and industrial profits, I must remind the hon. Member that the Government have substantially amended the Price Code, which they inherited from the last Administration, in ways which have been acceptable and welcome to industry. The amendments pay more than lip service to the need to stimulate productive investment.
Twelve months ago, the Government reduced the standard rate of productivity deduction from 50 per cent, to 20 per cent. We also improved the safeguard levels in the Price Code so that there is now a large number of firms which are not affected at all by the rules about allowable costs and the productivity


deduction. The £6 pay ceiling is dealing with the problem of rising labour costs, and the more slowly labour costs rise, the less the effect of the productivity deduction. At the current level of pay increases, the effect of the productivity deduction on industry's profit is a good deal less than it was in 1974.
The other major change at the end of 1974 was the introduction of a new investment relief. This is designed to enable companies to generate additional funds through prices and profits to help finance new investment. In the Price Commission's most recently published report, it estimated that the total relief claimed between December 1974 and August 1975 which may be reflected in prices and profits amounted to £344 million, covering 332 firms in Categories I and II.
Since then, my right hon. Friend the Secretary of State for Prices and Consumer Protection has announced her intention of extending the investment relief until the end of the present policy phase in July. Firms will be free, if they wish, to make a claim for further relief, based on a further 12 months' investment.
No one disputes that firms have been under very severe pressure during 1975. The Price Commision's most recently published report deals with the situation only up to August. There were signs then of some recovery in profit margins of Category I companies in the second quarter, but by and large the improvement was not significant. With falling industrial output, there is no reason to expect, I fear, an improvement in the

results for the third quarter when they are available.
What I cannot accept is that any simple cause-and-effect relationship can be set up between this poor performance and the Price Code. The market situation has prevented many firms from raising their prices, even in cases where price increases would be fully consistent with the rules of the Price Code. Firms' profits are low because we have been in a recession. When the outlook improves and output expands, one would expect the normal recovery in profits which accompanies this phase of the economic cycle.
As my right hon. Friend the Chancellor of the Exchequer indicated in his New Year message, there are now signs that the recession is bottoming out. There were hints of recovery in the CBI's Monthy Trends Inquiry for December. The Department of Industry's latest Investment Intentions Inquiry expects the decline in investment to be much less in 1976 than in 1975, and for 1977 a strong increase in manufacturing investment is forecast.
The next phase of the Government's counter-inflation policy therefore must be a policy suited to expansion. It is not possible to speculate at this point of time on the ingredients of such a policy—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half past Eleven o'clock.